ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -We demonstrate that, under commodity taxation, the social marginal cost curve of public good provision is initially upward sloping and eventually becomes downward sloping. Moreover, the social marginal cost eventually falls below the private marginal cost.

Detailed explanation-2: -The marginal cost curve is generally upward-sloping, because diminishing marginal returns implies that additional units are more costly to produce.

Detailed explanation-3: -A marginal cost curve slopes downward as a firm increases its output from 0, but as output continues to expand, the marginal cost eventually slopes upward and becomes vertical. This is because, at very low levels of production, the firm can achieve economies of scale by increasing production.

Detailed explanation-4: -The slope of water quality is downward because the added social benefit from pure water is lesser when the quality of water is poor. The demand curve depicts a person’s marginal benefit from one water supply unit.

Detailed explanation-5: -Explanation: The marginal benefit curve shows a downward slope as the benefit is reducing with each unit of consumption. Whenever consumption increases, the marginal benefit decreases, furthermore the marginal benefit curve slope goes downward.