ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The demand curve for a good or service shows the marginal private benefit (MPB) to those individuals who are consuming the product. It shows how many units will be demanded by consumers at different prices. The demand curve also shows the highest prices consumers will pay for different quantities of the product.

Detailed explanation-2: -The demand (or marginal benefit) curve is downward-sloping to reflect the fact that people will pay less for additional units of a good as they consume more of it.

Detailed explanation-3: -If consumers are the only group deriving benefit from a commodity, then the demand curve is the marginal social benefit curve. Marginal social benefit is the benefit society receives when an additional unit of a commodity is produced.

Detailed explanation-4: -The same analysis can be applied to a situation where the MSB are greater than the MPB at every level of output. This means that there are positive externalities. In these scenarios, we assume MSC and MPC are the same line as there is no external cost. The free market equilibrium point is where MC=MPB.