Econ 6.8

The social benefit of a given level of a public good is the vertical sum of all private benefits for that level.

True

How does the construction of a market demand curve for a private good differ from that for a public good?

The market demand curve for a private good is determined by adding up the quantities demanded by each consumer at each price but the market demand curve for a public good is determined by adding up the price each consumer is willing to pay for each quantity of the good.

For-profit producers will produce only private goods because

buyers will be willing to pay for the goods since the benefits are excludable.

Private producers have no incentive to provide public goods because

once produced, it will not be possible to exclude those who do not pay for the good.

One difference between the demand for a private good and that for a public good is that

with a private good, each consumer chooses the quantity she wants to consume but with a public good, everyone consumes the same quantity.