What is the relationship between the marginal social benefit curve and the market demand curve. Explain
What will be an ideal response?
The market demand curve is also the marginal social benefit curve. The market demand curve shows the maximum price that consumers are willing to pay to buy another unit of the good. Marginal social benefit is the value of one more unit of a good, which equals the maximum price that people are willing to pay to get it. So the market demand curve is the marginal social benefit curve.
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Assume that price exceeds average variable cost over the relevant range of demand
If a monopolistically competitive firm is producing at an output where marginal revenue is $111.11 and marginal cost is $118, then to maximize profits the firm should increase its output.
During a period of contractionary monetary policy
A) the price level is increased, which leads to an increase in the money supply. B) the price level is decreased, which leads to a decrease in the money supply. C) the rate of growth of the money supply is increased, leading to an increase in the price level. D) the rate of growth of the money supply is reduced, leading to a decrease in the price level.
The most obvious measure of low levels of development is
A. oil production. B. lack of water. C. low per capita income levels. D. bilingualism.
What is one reason firms might lobby to prevent entry into their market?
A) The long run equilibrium might be characterized by P = MC = ATC. B) The long run equilibrium might be characterized by P = MC < ATC. C) The long run equilibrium might be characterized by P > MC = ATC. D) The long run equilibrium might be characterized by P = MC > ATC.