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A-Level Economics · Positive consumption externality diagram question

Which distance shows the MARGINAL EXTERNAL BENEFIT of the last unit the market consumes?

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The diagram

The answer

The distance E G. MSB minus MPB at Q=5: the £4 of benefit to OTHERS from the market's last jab. MEB = the VERTICAL gap between MSB and MPB at the quantity in question. At the market quantity (Q=5) that's E up to G: £4 of spillover benefit.

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This is one of 5 questions on the positive consumption externality diagram — every corner lettered, every wrong answer diagnosed.

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