An efficient level of provision of a public good is achieved when

Question

Quizplus · Accepted Answer

An efficient level of provision of a public good is achieved when the cost of providing an extra unit of the good is equal to the sum of the valuations of all consumers for that unit. This is because when the cost equals the total value of the good for all consumers, it means that any further production of the good would either result in a waste of resources or a loss to the providers as the total value of the good to consumers would be less than the cost of producing it. Therefore, the most efficient level of provision is reached when the cost equals the total valuation.

An Efficient Level of Provision of a Public Good Is