Use the following to answer questions:
Figure: An Individual's Marginal Benefit from a Public Good
-(Figure: An Individual's Marginal Benefit from a Public Good) Look at the figure An Individual's Marginal Benefit from a Public Good. Assume that two individuals will share consumption of a public good; each individual has the marginal benefit curve shown in the figure. If the marginal cost of the good is $24, how many units of the public good will be provided by the private market?
A) 0
B) 8
C) 12
D) 16

Question

Use the following to answer questions:
Figure: An Individual's Marginal Benefit from a Public Good 
-(Figure: An Individual's Marginal Benefit from a Public Good) Look at the figure An Individual's Marginal Benefit from a Public Good. Assume that two individuals will share consumption of a public good; each individual has the marginal benefit curve shown in the figure. If the marginal cost of the good is $24, how many units of the public good will be provided by the private market?
A) 0 
B) 8 
C) 12 
D) 16

Quizplus · Accepted Answer

In a private market, public goods are typically underprovided because individuals do not have an incentive to pay for their full value, leading to a free-rider problem. Since the marginal cost is $24 and individuals' marginal benefit is less than $24 for any quantity, no units will be provided.

Use the Following to Answer Questions