If benefit functions for a public good could be identified accurately, incremental benefits would be measured as
A) the area under the MSB function between the pre- and post-policy abatement levels.
B) the area under the TSB function between the pre- and post-policy abatement levels.
C) a horizontal distance on the MSB model corresponding to the pre- and post-policy abatement levels
D) none of the above

Question

Quizplus · Accepted Answer

Incremental benefits refer to the gain or additional benefits realized from a policy intervention, which can be measured by the change in the area under the marginal social benefit (MSB) curve between the pre- and post-policy abatement levels. This area represents the additional net benefit that accrues to society from the policy intervention. Therefore, option A is the most appropriate choice as it offers a method of accurately measuring the incremental benefits for a public good based on the MSB function. Option B is incorrect as it refers to the total social benefit function (TSB) rather than the marginal social benefit. Option C is incorrect as it suggests a horizontal distance, which is not relevant to measuring the incremental benefits of a policy intervention. Option D is incorrect as only option A offers a valid approach to measuring incremental benefits.

If Benefit Functions for a Public Good Could Be Identified