Use the following to answer questions:
Scenario: Ben and Nick
Ben and Nick are the only members of a community. They have revealed the marginal private benefits they each receive from a public good whose marginal social benefit is known. In addition, the marginal social cost (MSC) of the public good is known and is constant.
-(Scenario: Ben and Nick) Look at the figure and scenario Ben and Nick. Q4:
A) is the socially optimal level of provision of the public good.
B) is equal to P4 + P3 in marginal social benefits.
C) represents an amount at which the MSB is greater than the MSC.
D) will not be produced, since neither Ben nor Nick finds any benefit in it at this level.
Correct Answer:
Verified
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