Acid rain check 140 120 100 80 60 40 20 0 1 2 3 4 mb

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Unformatted text preview: 20 0 1 2 3 4 MB Quantity (number of acid-rain checks) Economy's Marginal Benefit sum vertically 5 The Efficient Quantity of a Public Good Quantity (number of acid-rain checks Total benefit (billions of dollars) Marginal benefit (billions of dollars per acid-rain check) Total cost (billions of dollars) Marginal cost (billions of dollars per acid-rain check) Net benefit (billions of dollars) 0 1 2 3 4 5 0 2.0 3.5 4.5 5.0 5.0 2.0 1.5 1.0 0.5 0 0 0.5 1.5 3.0 5.0 7.5 0.5 1.0 1.5 2.0 2.5 0 1.5 2.0 1.5 0 -2.5 The Efficient Quantity of a Public Good Total benefit and total cost (billions of dollars) Total Benefit & Total Cost 7.5 Marginal benefit (billions of dollars per acid-rain check) Marginal Benefit & Marginal Cost MC TC 2.0 5.0 TB 3.5 M 1.0 Efficient use of resources 1.5 Net benefit $2.0 billion MB 0 1 2 3 4 5 Quantity (number of acid-rain checks) 0 1 2 3 4 5 Quantity (number of acid-rain checks) Bureaucratic Overprovision TC 7.5 Total benefit and total cost (billions of dollars) 5.0 3.5 G...
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This document was uploaded on 03/14/2014.

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