Figure 5-3
-Refer to Figure 5-3.The size of marginal external benefits can be determined by
A)the demand curve D2.
B)D2 + D1 at each output level
C)D2 - D1 at each output level.
D)the demand curve D1.

Question

Figure 5-3 
-Refer to Figure 5-3.The size of marginal external benefits can be determined by
A)the demand curve D2. 
B)D2 + D1 at each output level 
C)D2 - D1 at each output level. 
D)the demand curve D1.

Quizplus · Accepted Answer

The size of marginal external benefits can be determined by calculating the difference between the demand curve that includes the external benefits (D2) and the demand curve that only reflects private benefits (D1). Therefore, the correct choice is C.

Figure 5-3 -Refer to Figure 5-3.The Size of Marginal External Benefits Can