Problem 1

Introduction

Individual demand is a measure of a consumer's marginal value from a commodity. The market demand is the total overall particular needs. Because it quantifies the benefits gained by the customers purchasing the commodity, market demand catches the marginal private benefits (MPB) of the commodity. Many items have both internal and external advantages. External benefits are those obtained by anybody who did not buy the item yet benefited as a result of the customer's purchasing. Whenever external benefits occur, it can be called a positive externality, which occurs whenever the marginal benefit to the economy exceeds the marginal benefit to the item's purchasers. The marginal social benefits (MSB) are the sum of the private marginal and outside gains.