Which curve is the same as the market demand curve? Why are the curves the same?
What will be an ideal response?
The market demand curve is the same as the marginal social benefit curve. For any quantity, the demand curve shows the dollar value of other goods and services a consumer is willing to forgo to get another unit of the good. (This amount is the maximum price the consumer is willing to pay and equals the price from the demand curve vertically above each quantity.) But the amount of other goods and services the consumer is willing to forgo is the marginal social benefit of the good. Hence along the market demand curve the price associated with each quantity of the good is the same as the marginal social benefit of that quantity. (So that, for instance, the price associated with the 3rd quantity is the same as the marginal social benefit of the 3rd unit.) Therefore the market demand curve is the same as the marginal social benefit curve.
You might also like to view...
A community in a Southeastern state passed a beautification ordinance (law) prohibiting the placement of indoor furniture outside of homes (i.e., no couches on the porch). The law represents a conflict between ____ and ____
a. the rich; the poor b. third parties; market participants c. victims; criminals d. public goods; private goods e. residents; visitors
Refer to the graph shown. The shift in the graph from D1 to D2 shows how an expansionary U.S. fiscal policy can cause an increase in:
A. interest rates that reduce the dollar's value. B. prices that raise the dollar's value. C. prices that reduce the dollar's value. D. interest rates that raise the dollar's value.