Consider an economy with just two citizens.If Sanjay's marginal benefit from an hour of mosquito control efforts is $10 and Anjali's marginal benefit is $25,then the optimal number of hours of a public good like mosquito control occurs when the marginal cost of an additional hour of mosquito control is:
A)$25.00.
B)$17.50.
C)$10.00.
D)$35.00.

Question

Quizplus · Accepted Answer

The optimal number of hours of a public good like mosquito control occurs when the sum of the marginal benefits equals the marginal cost. Here, Sanjay's marginal benefit is $10 and Anjali's is $25, so the combined marginal benefit is $35. Therefore, the optimal point is when the marginal cost is $35.

Consider an Economy with Just Two Citizens