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Scenario: Alexander and Vanessa
Alexander and Vanessa benefit from scientific research.Alexander's marginal private benefit from such research is given by the equation MPB = 200 - Q,where Q refers to the amount of research undertaken and MPB captures the marginal private benefit Alexander gets from different marginal quantities.Meanwhile,Vanessa's marginal private benefit from such research is given by the equation MPB = 100 - Q.The marginal social cost of such research is constant at $100.
-(Scenario: Alexander and Vanessa)Use Scenario: Alexander and Vanessa.If Alexander and Vanessa are the only two individuals in a society,which equation CORRECTLY represents the marginal social benefit (MSB)of scientific research?
A) MSB = 300 - 2Q
B) MSB = 100 - Q
C) MSB = 200 - Q
D) MSB = 100

Question

Quizplus · Accepted Answer

The marginal social benefit (MSB) is the sum of the marginal private benefits of all individuals in the society. Therefore, MSB = (200 - Q) + (100 - Q) = 300 - 2Q.

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