Question

Marginal benefit is A. the difference between the highest price a consumer is willing to pay and the price the consumer actually pays. B. the additional benefit from consuming one more unit. C. the additional cost of producing one more unit. D. a legally determined maximum price that sellers may charge. Why is the demand curve referred to as a marginal benefit​ curve? A. It shows the price consumers actually pay to consume a product. B. It shows the difference between the highest price a consumer is willing to pay and the lowest price a firm would be willing to accept. C. It shows the difference between the highest price a consumer is willing to pay and the marginal benefit of consumption. D. It shows the willingness of firms to supply a product at different prices. E. It shows the willingness of consumers to purchase a product at different prices.

Answer 1

Answer:

Marginal Benefit : B. the additional benefit from consuming one more unit.

Demand Curve = Marginal Benefit Curve as : E. It shows the willingness of consumers to purchase a product at different prices.

Explanation:

Benefit is the rise in satisfaction from consumption. Marginal Benefit is the additional benefit from consuming an additional unit. So, it is addition to satisfaction with an additional consumption i.e Marginal Utility (MU).  

Consumer purchases a good only if : Its marginal benefit i.e MU ≥ its marginal cost i,e price. As MU < Price implies additional benefit < additional cost, & consumer will not consume at this point.

So, Marginal Utility/ Marginal Benefit reflects consumer's willingness to pay for a good's consumption. Hence, Demand Curve is also called Marginal Benefit Curve.