The diagram below shows the marginal benefit and marginal cost of a public good.This economy has 3 individuals,A,B and C.The diagram shows the MB for each individual and a summation of their marginal benefits.
FIGURE 16-4
-Refer to Figure 16-4.Suppose the optimal amount of this good is provided,but that Individual B was only consuming Q2 units of the good.What would be the marginal cost of Individual B consuming an extra unit of this good?

Question

The diagram below shows the marginal benefit and marginal cost of a public good.This economy has 3 individuals,A,B and C.The diagram shows the MB for each individual and a summation of their marginal benefits.
  FIGURE 16-4
-Refer to Figure 16-4.Suppose the optimal amount of this good is provided,but that Individual B was only consuming Q2 units of the good.What would be the marginal cost of Individual B consuming an extra unit of this good?

Quizplus · Accepted Answer

The marginal cost of consuming an extra unit of a good is the change in total cost divided by the change in quantity consumed. In this case, the total cost of consuming Q2 units of the good is P2, and the total cost of consuming Q2+1 units of the good is P4. Therefore, the marginal cost of consuming an extra unit of the good is P4-P2. However, since the optimal amount of the good is being provided, the marginal cost of consuming an extra unit of the good is zero.

The Diagram Below Shows the Marginal Benefit and Marginal Cost