Suppose that Mick and Cher are the only two members of society and are willing to pay $10 and $12, respectively, for the fifth unit of a public good. Also, assume that the marginal cost of the fifth unit is $23. We can conclude that
A)the fifth unit should be produced.
B)the fifth unit should not be produced.
C)zero units should be produced.
D)3 units should be produced.

Question

Quizplus · Accepted Answer

The total willingness to pay for the fifth unit by Mick and Cher is $22 ($10 + $12), which is less than the marginal cost of $23. Therefore, the fifth unit should not be produced as the cost exceeds the benefit.

Suppose That Mick and Cher Are the Only Two Members