Asked by katira Gonzalez on Jun 15, 2024
Verified
Alex,Kara,and Susie are the only three people in a community and Alex is willing to pay $20 for the fifth unit of a public good;Kara,$15;and Susie,$25.Government should produce the fifth unit of the public good if the marginal cost is less than or equal to:
A) $25.
B) $15.
C) $60.
D) $300.
Public Good
An item or service made available at no cost to everyone in society, delivered by public institutions, private organizations, or individuals without aiming for financial gain.
Marginal Cost
The cost of producing one additional unit of a good or service, a concept crucial for understanding economic decision-making and pricing strategies.
- Compute the eagerness of individuals and communities to finance public goods.
- Gain insight into the principle of analyzing marginal costs and benefits for decision-making purposes.
Verified Answer
JC
Jazzlyn ChaidezJun 21, 2024
Final Answer :
C
Explanation :
The marginal benefit of producing the fifth unit of a public good is the sum of the willingness to pay of all three individuals (Alex: $20, Kara: $15, Susie: $25), which totals $60. The government should produce it if the marginal cost is less than or equal to this amount.
Learning Objectives
- Compute the eagerness of individuals and communities to finance public goods.
- Gain insight into the principle of analyzing marginal costs and benefits for decision-making purposes.