Chapter 75, Problem 5MCQ

To determine

Marginal social benefit

Answer to Problem 5MCQ

From the available options, the correct option is marginal external benefit.

Explanation of Solution

The marginal social benefit is equal to the total of marginal private benefit and marginal external benefit. Whereas, marginal social benefit would not consider costs which means options d and e are incorrect. And, the total external benefit would not provide the answer to the marginal external benefit therefore, the correct option is a (marginal external benefit)

Economics Concept Introduction

Introduction: The benefits which are obtained by the third party who is not actually buying, selling, or consuming the good are called external benefits such as using a vehicle to travel that reduces the congestion on the road because it provides benefit to other drivers so that they can drive quickly and safely.

Marginal private benefit is the benefit that is obtained by an individual by using an extra unit of the product. And, marginal social benefit is the benefit which is obtained by the whole society as well as the individual by producing an extra unit of a product.