Unformatted text preview: marginal social surplus curve can be found by substituting it and the MC curve into the definition of MSS: MSS = MB - MC MSS = (75 - Q) - (5 + Q) MSS = 70 - 2*Q As a check, notice that MSS = 0 when Q = 35. Inserting 35 into the demand curve gives P = W2P = MB = 40. Inserting 35 into the MC curve gives MC = 40. Thus, when MSS = 0, MB = MC. The last unit generates no social surplus because the marginal cost of producing it is just equal to the marginal benefits it provides....
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This note was uploaded on 04/05/2012 for the course ECN 437 taught by Professor Peterwilcoxen during the Spring '12 term at Syracuse.
- Spring '12