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Alexander and Vanessa benefit from scientific research. Alexander's marginal private benefit from such research is given by the equation P = 200 - Q, where
Alexander and Vanessa benefit from scientific research. Alexander's marginal private benefit from such research is given by the equation P = 200 - Q, where Q refers to the amount of research undertaken and P is the price Alexander is willing to pay for such research. Vanessa's marginal private benefit from such research is given by the equation P = 100 - Q. The marginal social cost of engaging in such research is constant at $100.
- If Alexander and Vanessa are the only two individuals in a society, what is the equation which correctly represents the marginal social benefit (MSB) of scientific research?
- What is the socially optimal amount of scientific research for this economy?
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