00:01
Hello, so we have to interpret this graph that we're given here with the question.
00:04
So our first blank and question that we're asked here is what is the optimal quantity of city verification projects? we have to use the interactive points to draw the marginal social benefits.
00:14
Now we can't really draw the benefits, however, but it is going to be a curve.
00:19
Now we kind of, instead of drawing it, we're going to go step by step and explain what happens.
00:24
We have to explain why the msp intersects with the msc, and then we have to draw.
00:30
To understand why that matters.
00:32
So the marginal social cost msc on the graph is fixed at $400, a horizontal line on the graph across the entire graph.
00:43
This is important and that is good for us.
00:45
While the marginal social benefit is derived by summing the benefits of type a and type b citizens for each level of city beautification projects.
00:53
So let's analyze the graph step by step and see what we can do.
00:57
So the msb calculation.
00:59
The m is b calculation...