The following information is for a public good.P_a and P_b are the prices that individuals A and B are willing to pay for the last unit of a public good, rather than do without it.These people are the only two members of society.The collective willingness of this society to pay for the 2^nd unit of this public good is: A)$2 B)$4 C)$6 D)$8

Question

Quizplus · Accepted Answer

To find the total willingness to pay for the 2 units of the public good, we add up the individual willingness to pay for the last unit of the public good, which is P_a and P_b. Thus, the total willingness to pay is: P_a + P_b = $5 + $1 = $6 Therefore, the best choice is C, $6, as it represents the total collective willingness to pay for the 2 units of the public good.

The Following Information Is for a Public Good