An efficient level of provision of a public good is achieved when
A)the cost of providing an extra unit of the good is equal to the valuation of each consumer of the extra unit.
B)the cost of providing an extra unit of the good is equal to the sum of the valuations of all consumers for that unit.
C)the cost of providing an extra unit of the good is equal to the price of the good.
D)the valuation of each consumer for the last unit of the good produced is zero.
E)voters are satisfied that an adequate amount of the good is being produced.

Question

Quizplus · Accepted Answer

The efficient provision of a public good occurs when the marginal cost of providing an extra unit equals the sum of the marginal valuations of all consumers, reflecting the non-excludable and non-rivalrous nature of public goods.

An Efficient Level of Provision of a Public Good Is