Refer to the above supply and demand graph for a public good.Point c on the graph shows where the:
A) total benefit equals the total cost of the public good.
B) marginal benefit equals the marginal cost of the public good.
C) average benefit equals the average cost of the public good.
D) total benefit equals the marginal cost of the public good.

Question

Refer to the above supply and demand graph for a public good.Point c on the graph shows where the:
A) total benefit equals the total cost of the public good. 
B) marginal benefit equals the marginal cost of the public good. 
C) average benefit equals the average cost of the public good. 
D) total benefit equals the marginal cost of the public good.

Quizplus · Accepted Answer

Point c represents the equilibrium point where the marginal benefit (MB) equals the marginal cost (MC) of the public good. At this point, the level of the public good is such that the last unit provided adds the same amount of benefit as its cost, resulting in the maximum net benefit to society. Therefore, the correct choice is B) marginal benefit equals the marginal cost of the public good.

Refer to the Above Supply and Demand Graph for a Public