There are 20 residents in the village of Towneburg. The size of the village's annual fireworks display depends upon the number of shells that are fired off. Each resident's demand for fireworks is shown below. The total cost of the fireworks display is $1,000 plus $10 per shell. Collectively, the residents of Towneburg would be willing to pay ________ for the 24ᵗʰ shell, and the marginal cost of the 24ᵗʰ shell is ________.

Question

There are 20 residents in the village of Towneburg. The size of the village's annual fireworks display depends upon the number of shells that are fired off. Each resident's demand for fireworks is shown below. The total cost of the fireworks display is $1,000 plus $10 per shell.  Collectively, the residents of Towneburg would be willing to pay ________ for the 24ᵗʰ shell, and the marginal cost of the 24ᵗʰ shell is ________.

Quizplus · Accepted Answer

Given the demand curve (P = 50 - 2Q), we can see that each resident would be willing to pay $2 for the 24ᵗʰ shell. Thus, collectively, the residents would be willing to pay $2 × 20 = $40 for the 24ᵗʰ shell. The marginal cost of each shell is $10, regardless of how many shells have been fired off.

There Are 20 Residents in the Village of Towneburg