The demand curve is similar to the marginal revenue curve in economics, and in a competitive system, demand and supply curves represent marginal benefit and marginal cost. Optimal resource allocation occurs when marginal benefit equals marginal cost.
The demand curve is most similar to the marginal revenue curve in economics. The marginal revenue curve represents the change in total revenue when one additional unit is sold, just like how the demand curve shows the quantity of a good consumers are willing to buy at a given price.
In a competitive system, the corresponding demand and supply curves can be seen as marginal benefit and marginal cost curves respectively. This helps in analyzing the equilibrium price and quantity in the market.
The optimal quantity of a public good is where marginal benefit (society's benefit) equals marginal cost (provider's cost), highlighting the efficiency in resource allocation.
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