Suppose a public good is provided in an economy with only two consumers,Popeye and Captain Hook.If Popeye values the public good at $4,000 per year,and Captain Hook values it at $3,000 per year,the economy's marginal benefit of the public good per year is
A) $7,000.
B) $4,000.
C) $3,000.
D) $1,000.
E) $12,000.

Question

Quizplus · Accepted Answer

The marginal benefit of a public good in an economy is the sum of the valuations of all individuals. Popeye values it at $4,000 and Captain Hook at $3,000, so the total marginal benefit is $4,000 + $3,000 = $7,000.

Suppose a Public Good Is Provided in an Economy with Only