(Scenario: Private and External Benefits)Use Scenario: Private and External Benefits.How many hours of lawn upkeep will occur in this community,and what will be the marginal private benefit of such upkeep? Scenario: Private and External Benefits
A small community finds that tidy lawns and neighborhoods provide both private and external benefits.They determine that the marginal private benefit (MPB)of lawns can be represented by the equation MPB = 50 - 0.5Q,where Q is the number of hours spent on keeping lawns tidy.The marginal private cost (MPC)of such lawn upkeep is represented by the equation MPC = 0.5Q,where Q is again the number of hours engaged in lawn upkeep.
A)50 hours and $50
B)45 hours and $20
C)50 hours and $25
D)100 hours and $50

Question

Quizplus · Accepted Answer

To find the optimal level of lawn upkeep, we need to set the MPB equal to the MPC: 
50 - 0.5Q = 0.5Q 
Solving for Q: 
50 = Q

So, the community will engage in 50 hours of lawn upkeep. To find the marginal private benefit at this level of upkeep: 
MPB = 50 - 0.5(50) = $25

So, the marginal private benefit of lawn upkeep is $25. Therefore, the best choice is C.