ECONOMICS
MARKET FAILURES
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Marginal Private Benefits
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Marginal Social Benefits
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Negative Externality of Production
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Tradable Permits/Cap and Trade Schemes
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Detailed explanation-1: -Marginal benefits are the maximum amount a consumer will pay for an additional good or service. A marginal benefit is also the additional satisfaction that a consumer receives when the additional good or service is purchased. The marginal benefit generally decreases as consumption increases.
Detailed explanation-2: -As long as the consumer’s marginal benefit is greater than their marginal cost, they will purchase the good. Therefore, the maximum amount a consumer is willing to pay is equal to their marginal benefit.
Detailed explanation-3: -Marginal benefit is the benefit a consumer receives by consuming an additional unit of a good or service. The price the consumer is willing to pay for this additional unit measures the marginal benefit he or she derives from its consumption.
Detailed explanation-4: -If the marginal benefit received from consuming a good is greater than the marginal cost of production: society’s well-being cannot be improved by changing production.