A quiet town in Kansas has 2,000 people, all of whom have the same preferences. There is one private good and one public good. Each person I in town has utility U(x i, y) = x i + y .5, where x i is private good for person i and y is the amount of public good that the town provides. If the private good costs $1 per unit and the public good costs $10 per unit, then the Pareto optimal amount of public good for the town to provide is
A) 100 units.
B) 500 units.
C) 2,000 units.
D) 8,000 units.
E) 10,000 units.
Correct Answer:
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