ECONOMICS MCQ- NOV 2008 P1 Q 16

[dasani0708]

16 The table shows, for two different quantities of good X, the total amount consumers are willing to
pay and the total external benefits that are generated.
quantity of good X
(units)
consumers’ willingness
to pay ($)
total external benefits
($)
3 240 54
4 280 68
What is the additional social benefit when 4 units rather than 3 units are produced?
A $14 B $40 C $54 D $348

how to get the answer.

 

[Moiz]

Social benefit= Private benefit + external benefit

Consumer's willingness to pay is the Private benefit here:
For 3 SB= 240+54=294
For 4 SB= 280+68=348

So additional SB= 348-294=54