Esteban, Mariko, and Greta are the only three people in a community. Esteban is willing to pay $20 for the ﬁfth unit of a public good; Mariko, $15; and Greta, $25. Government should produce the ﬁfth unit of the public good
If the marginal cost is less than or equal to

Question

Quizplus · Accepted Answer

The government should produce the fifth unit of a public good if the total willingness to pay (sum of individual willingness to pay) exceeds the marginal cost. Esteban ($20) + Mariko ($15) + Greta ($25) = $60. Therefore, production is justified if the marginal cost is less than or equal to $60.

Esteban, Mariko, and Greta Are the Only Three People in a Community