Refer to the diagrams below in which figures (a)and (b)show demand curves reflecting the prices Alvin and Elmer are willing to pay for a public good,rather than do without it.If the marginal cost of the optimal quantity of this public good is $10,the optimal quantity must be:

Question

Quizplus · Accepted Answer

The optimal quantity of a public good is where the marginal cost of providing an additional unit of the public good is equal to the marginal benefit that people receive from that additional unit. 
In this case, the marginal cost is given as $10. Looking at the demand curves of Alvin and Elmer, we see that at a price of $10, Alvin is willing to buy 2 units, and Elmer is willing to buy 1 unit. Therefore, the total quantity demanded at a price of $10 is 3 units (2 by Alvin and 1 by Elmer), which matches the optimal quantity. Therefore, the answer is C) 3 units.

Refer to the Diagrams Below in Which Figures (A)and (B)show