Alex,Kara,and Susie are the only three people in a community and 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:
A) $25.
B) $15.
C) $60.
D) $300.

Question

Quizplus · Accepted Answer

The marginal benefit of producing the fifth unit of a public good is the sum of the willingness to pay of all three individuals (Alex: $20, Kara: $15, Susie: $25), which totals $60. The government should produce it if the marginal cost is less than or equal to this amount.

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