An increase in the marginal social benefit of consuming a public good should result in

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Prepare for the AP Microeconomics exam on Market Failure and the Role of Government with detailed quizzes featuring multiple-choice questions, hints, and explanations. Master your understanding and ace the test!

Multiple Choice

An increase in the marginal social benefit of consuming a public good should result in

Explanation:
In evaluating a public good, the efficient amount provided is where the marginal social benefit from one more unit equals the marginal cost of producing that unit. If the marginal social benefit rises, that equality occurs at a higher quantity, because each additional unit is now deemed more valuable to society. So more of the public good should be provided to maximize welfare. The other options would require a change in costs or a decrease in benefits, which isn’t implied by an increase in marginal social benefit.

In evaluating a public good, the efficient amount provided is where the marginal social benefit from one more unit equals the marginal cost of producing that unit. If the marginal social benefit rises, that equality occurs at a higher quantity, because each additional unit is now deemed more valuable to society. So more of the public good should be provided to maximize welfare. The other options would require a change in costs or a decrease in benefits, which isn’t implied by an increase in marginal social benefit.

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