Table 11-6
Consider the city of Widgetapolis with only four residents, John, James, Mary, and Lydia. The four residents are trying to determine how many hours to spend in cleaning up the public lake. The table below shows each resident's willingness to pay for each hour of cleaning.

-Refer to Table 11-6. Suppose the cost to clean the lake is $40 per hour and that the residents have agreed to split the cost of cleaning the lake equally. To maximize his own surplus, how many hours of cleaning would John like to have completed?
A)2 hours
B)3 hours
C)4 hours
D)5 hours

Question

Table 11-6
Consider the city of Widgetapolis with only four residents, John, James, Mary, and Lydia. The four residents are trying to determine how many hours to spend in cleaning up the public lake. The table below shows each resident's willingness to pay for each hour of cleaning.  ​
​
-Refer to Table 11-6. Suppose the cost to clean the lake is $40 per hour and that the residents have agreed to split the cost of cleaning the lake equally. To maximize his own surplus, how many hours of cleaning would John like to have completed?
A)2 hours 
B)3 hours 
C)4 hours 
D)5 hours

Quizplus · Accepted Answer

To maximize his own surplus, John would want the number of hours where his marginal benefit equals his share of the cost. If the cost is $40 per hour and split equally among residents, John would choose the number of hours where his marginal benefit is at least $20 (assuming two residents). If John's marginal benefit for 4 hours is $20, he would choose 4 hours.

Table 11-6 Consider the City of Widgetapolis with Only Four Residents, John