ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The demand curve represents marginal benefit. The vertical distance at each quantity shows the mount consumers are willing to pay for that unit. Willingness to pay reflects the benefit derived from each unit.

Detailed explanation-2: -Marginal benefit is the maximum amount of money a consumer is willing to pay for an additional good or service. The consumer’s satisfaction tends to decrease as consumption increases. Marginal cost is the change in cost when an additional unit of a good or service is produced.

Detailed explanation-3: -Marginal social cost reflects the impact that an economy feels from the production of one more unit of a good or service.

Detailed explanation-4: -The demand curve shows the willingness to pay for an additional unit of the good or service, so it is equal to the marginal benefit of that good. Therefore, the demand curve is referred to as the marginal benefit curve.

Detailed explanation-5: -Once again, we see that as the price falls, quantity demanded increases. If we join the points together as in Figure 3.2c, we produce a demand curve – a graphical representation of our demand schedule. This is the same as a Marginal Benefit Curve, as it shows the consumers marginal benefit at a given quantity.