Equilibrium for public goods is characterized by A) MSB = MSB. B) SMRS = MRT. C) MRS₁ = MRS₂ = MRS₃ = … = MRS_n = MRT. D) MC = MB. E) MRS - MRT = MSB.

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Equilibrium for public goods is characterized by the condition that the marginal social benefit (MSB) equals the marginal cost (MC). In the case of public goods, the marginal cost is equal to the sum of the marginal costs of all individuals who benefit from the good. The condition for equilibrium is often written as SMRS = MRT, where SMRS is the sum of the marginal rates of substitution of all individuals for the public good, and MRT is the marginal rate of transformation (or production) of the public good. Choice C presents a variation of this equation, where the marginal social surplus (i.e. the difference between the marginal social benefit and the marginal cost) for each individual is summed up and equated to the marginal rate of transformation. This equation is also a valid condition for equilibrium, although it is more cumbersome to use because it requires the calculation of individual marginal social surpluses.

Equilibrium for Public Goods Is Characterized by