If the marginal social cost of a pure public good exceeds its marginal social benefit, additional units of the good can still be financed by voluntary contributions.

Question

Quizplus · Accepted Answer

If the marginal social cost exceeds the marginal social benefit, it means that the cost of producing an additional unit of the public good is greater than the value it provides to society. In such a case, voluntary contributions may not be enough to finance the production of additional units.

If the Marginal Social Cost of a Pure Public Good