Question

An increase in the marginal social benefit of consuming a public good should result in A. a decrease in public production of the good B. an increase in the optimal quantity of the good C. a decrease in the optimal quantity of the good D. a decrease in the social costs associated with producing the good E. a decrease in the social costs associated with consuming the good

Answer 1

An increase in the marginal social benefit of consuming a public good should result in an increase in the optimal quantity of the good.

Option B is Correct

Step-by-step explanation:

The incremental advantage of a company perceived by society as the sum of marginal public advantages and marginal secrecy.

For example, a customer is prepared to pay five dollars for an ice cream, which means that the marginal advantage of eating ice cream is five dollars.

There is also a lack of deadweight in the case of a favourable externality, as the total social benefit at consumer volume is higher than the marginal social cost.

When there is externality, the socially optimal result is not obtained. There are a number of government changes from' command-and-control' to market-based policies.