If the Marginal Social Cost of Producing a Public Good

question 66

Multiple Choice

If the marginal social cost of producing a public good is greater than the marginal social benefit,then

• A)more than the efficient quantity of the public good is being produced.
• B)less than the efficient quantity of the public good is being produced.
• C)the efficient quantity of the public good is being produced.
• D)the public good is being produced by a private firm.
• E)the public good must be a common resource.

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Definitions:

Willingness to Pay

The maximum amount a consumer is prepared to spend for a good or service, reflecting the value they place on it.

Demand Curve

A visual diagram depicting how the price of an item correlates with consumer demand for it.

Consumer Surplus

The difference between what consumers are willing to pay for a good or service and what they actually pay, indicating the benefit to consumers.

Demand Curve

The Demand Curve is a graph showing the relationship between the price of a good and the quantity of that good that consumers are willing to purchase at each price level.