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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. At all levels of provision of the public good:
A) Ben places a higher value on the public good than Nick.
B) the MSC is less than the MSB.
C) the optimal level is not attained.
D) the private marginal benefits cannot be determined.

Question

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. At all levels of provision of the public good:
A) Ben places a higher value on the public good than Nick. 
B) the MSC is less than the MSB. 
C) the optimal level is not attained. 
D) the private marginal benefits cannot be determined.

Quizplus · Accepted Answer

Ben places a higher value on the public good than Nick because his MSB is higher than Nick's at all levels of provision.

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