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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 $8, how many units of this public good will maximize society's welfare?
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 $8, how many units of this public good will maximize society's welfare?
A) 0 
B) 8 
C) 12 
D) 16

Quizplus · Accepted Answer

The marginal benefit for each individual is added together for public goods. If each individual's marginal benefit is $8 at 8 units, the combined marginal benefit is $16, which equals the marginal cost at 16 units. Thus, 16 units maximize society's welfare.

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