-Mike, Joe, and Sam are roommates. They need lamps for their common living room. Lamps in their living room are a public good for these roommates. The marginal benefit that each individual receives from varying numbers of lamps in the living room is given in the table above. If the marginal cost of a lamp is 13, what is the efficient number of lamps for the roommates to purchase?

Question

Quizplus · Accepted Answer

The efficient number of lamps is determined by summing the marginal benefits of all roommates and comparing this sum to the marginal cost of a lamp. The efficient number is reached when the combined marginal benefit equals or just exceeds the marginal cost, without going under it. Without the specific numbers from the table, the general principle is that you add up the marginal benefits for each lamp until this sum is equal to or just above the marginal cost of $13. This typically involves calculating the total marginal benefit for each additional lamp and stopping at the point where adding another lamp would make the total marginal benefit less than the marginal cost. Since the correct answer is indicated as C (2 lamps), this suggests that the sum of the marginal benefits from the first two lamps equals or exceeds $13, but adding a third lamp would bring the total marginal benefit below $13.

-Mike, Joe, and Sam Are Roommates