Assume there are two people in a society. Person A is willing to pay $140 to have one unit of a public good produced and Person B is willing to pay $160 to have one unit of a public good produced and $140 to have two units produced. As a result, society would be willing to pay a price of ________ of this public good.
A) $300 for 1 unit
B) $200 for 3 units
C) $200 for 1 unit
D) $160 for 5 units

Question

Quizplus · Accepted Answer

For one unit of the public good, Person A is willing to pay $140 and Person B is willing to pay $160, totaling $300. Public goods are non-rivalrous and non-excludable, so the total willingness to pay is the sum of each individual's willingness to pay.

Assume There Are Two People in a Society