Suppose that the town of Falls Valley has a mosquito problem.After a bad summer,the town accountants explain that the marginal cost of providing one more treatment for mosquito control is $100 000.The town should provide the additional mosquito control only if the marginal:
A) benefit for any individual citizen is at least $100 000.
B) benefits for all individual citizens add up to at least $100 000.
C) social cost of mosquito control is more than $100 000.
D) social cost of mosquito control is less than $100 000.

Question

Quizplus · Accepted Answer

The town should only provide the additional mosquito control if the marginal benefits for all individual citizens add up to at least $100,000. This is because the marginal cost of providing one more treatment for mosquito control is $100,000, so the town needs to ensure that the cost is outweighed by the benefits to the citizens. By choosing option B, the town ensures that the benefits to all citizens collectively are greater than the cost of providing the additional treatment.

Suppose That the Town of Falls Valley Has a Mosquito