The reason why we sum the demand curves of individual consumers vertically rather than horizontally in a public goods market is that:
A)the willingness to pay in a public good market is smaller than that in a standard market.
B)individual consumers are unlikely to be willing to pay enough to cover the marginal cost of production of a public good.
C)the marginal social benefit of the Xth unit includes all consumers' marginal social benefits because the public good is non-exclusive and non-rival.
D)the concept of quantities is meaningless in the case of public goods.

Question

Quizplus · Accepted Answer

In a public goods market, the marginal social benefit of the Xth unit includes all consumers' marginal social benefits because the public good is non-exclusive and non-rival. Therefore, we need to sum the demand curves of individual consumers vertically to get the total demand for the public good in the market. This is because each consumer's willingness to pay contributes to the overall social benefit derived from the provision of the public good. In a public goods market, the marginal social benefit of the Xth unit includes all consumers' marginal social benefits because the public good is non-exclusive and non-rival. Therefore, we sum the demand curves of individual consumers vertically to get the total social benefit of the public good. This is because each additional unit of the public good benefits everyone who can use it, and the benefit cannot be divided among consumers.

The Reason Why We Sum the Demand Curves of Individual