Answer the next question on the basis of the following information for public good.P_a and P_b represent the prices that citizens (a) and (b), the only two people in this nation, are willing to pay for additional units of a quantity (Q_c) of the public good.Q_s represents the quantity of the public good supplied by government at each of the collective prices.The collective willingness of this nation to pay for the fourth unit of the public good is: A)$7 B)$6 C)$5 D)$3

Question

Quizplus · Accepted Answer

Looking at the graph, at the point where Q_s intersects with the vertical line for the fourth unit of the public good, both citizens (a) and (b) are willing to pay a maximum of $2.50 each. Therefore, the collective willingness to pay for the fourth unit of the public good is $5 ($2.50 + $2.50). The best choice is option C, as it is the only one that corresponds to this value.

Answer the Next Question on the Basis of the Following