Question

When assessing the public welfare, where is the optimal spot for a government to spend on a program?
Responses, pick the best resposne

where the public benefit is higher than the marginal costs for public goods
where the public benefit is higher than the marginal costs for public goods - no response given

where the marginal costs are the highest for each additional public good
where the marginal costs are the highest for each additional public good - no response given

where the marginal costs exceed the public benefit
where the marginal costs exceed the public benefit - no response given

where the public benefit for public goods intersects with marginal costs

Answer 1

where the public benefit for public goods intersects with marginal costs

Explanation: the government should expand a program until the marginal benefit equals the marginal cost. If MB > MC, increasing spending raises net welfare; if MC > MB, cutting back raises net welfare.