1. Explain why total benefits increase at a decreasing rate, and what this means for the marginal benifits as output goes up. Explain why total cost increases at an increasing rate, and what this means for marginal cost as out put goes up. Explainhow to determine the net benifit maximizing amount of output usingtotal benifits and total cost. Explain how to determine the net benifit-maximizing amount of output using maginal benifit and maginal cost.
2. Explain how externalities and public goods cause " market Failure" or the market to result in a level of output that does not maximize net benefits. When Market failure happens, what types of public policy are necessary to result in the net benefit maximizing level of output when buyers and sellers are transacting a good with negative externalities or when the good is a public good.