The 20 residents of the village of Towneburg are considering hosting a fireworks show next summer.The total cost of the show is estimated to be $1,000 + $10 per unit.Each resident's demand for fireworks is identical: P = 50 - 2 * units as shown below:
The residents of Towneburg would be willing to pay a total of _____ for the twenty-fifth unit of fireworks and the marginal cost of providing the twenty-fifth unit is ______.

Question

The 20 residents of the village of Towneburg are considering hosting a fireworks show next summer.The total cost of the show is estimated to be $1,000 + $10 per unit.Each resident's demand for fireworks is identical: P = 50 - 2 * units as shown below: 
The residents of Towneburg would be willing to pay a total of _____ for the twenty-fifth unit of fireworks and the marginal cost of providing the twenty-fifth unit is ______.

Quizplus · Accepted Answer

To determine the total willingness to pay for the twenty-fifth unit, we need to find the price each resident is willing to pay at that quantity and then sum their individual willingness to pay. 
Each resident's demand function is P = 50 - 2*units 
When units = 25, P = 0, so residents are willing to pay $0 for the twenty-fifth unit. 
Therefore, the total willingness to pay for the twenty-fifth unit is $0.
To determine the marginal cost of providing the twenty-fifth unit, we need to find the additional cost of producing the twenty-fifth unit. Since the cost per unit is constant at $10, the marginal cost of providing the twenty-fifth unit is also $10. Therefore, the correct answer is B) $0;$10.

The 20 Residents of the Village of Towneburg Are Considering