Alex, Kara, and Susie are the only three people in a community. Alex is willing to pay $20 for the fifth unit of a public good; Kara, $15; and Susie, $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 public good if the total willingness to pay (sum of individual willingness) is greater than or equal to the marginal cost. Here, the total willingness to pay for the fifth unit is $20 (Alex) + $15 (Kara) + $25 (Susie) = $60.

Alex, Kara, and Susie Are the Only Three People in a Community