The diagram below shows the marginal benefit and marginal cost of a public good.This economy has 3 individuals,A,B and C.The diagram shows the MB for each individual and a summation of their marginal benefits.
FIGURE 16-4
-Refer to Figure 16-4.The curve MBABC is derived by
A) a vertical summation of the marginal benefits of all individuals at each level of output.
B) observation of the consumption of public goods at a price of zero.
C) observation of the consumption of public goods at the optimal price.
D) a horizontal summation of the marginal benefits of all individuals at each given price level.
E) determining the private marginal cost of the public good.
Correct Answer:
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