Use the following to answer question:
Figure: An Individual's Marginal Benefit from a Public Good
-(Figure: An Individual's Marginal Benefit from a Public Good)Use Figure: An Individual's Marginal Benefit from a Public Good.Assume that two individuals will share consumption of a public good;each individual has the marginal benefit curve shown in the figure.If the marginal cost of the good is $24,how many units of this public good would maximize society's welfare?
A)0
B)8
C)12
D)16

Question

Use the following to answer question:
Figure: An Individual's Marginal Benefit from a Public Good 
-(Figure: An Individual's Marginal Benefit from a Public Good)Use Figure: An Individual's Marginal Benefit from a Public Good.Assume that two individuals will share consumption of a public good;each individual has the marginal benefit curve shown in the figure.If the marginal cost of the good is $24,how many units of this public good would maximize society's welfare?
A)0 
B)8 
C)12 
D)16

Quizplus · Accepted Answer

To maximize society's welfare with a public good, the sum of the marginal benefits (MB) from all individuals should equal the marginal cost (MC) of providing the good. In this case, since both individuals have the same MB curve and the MC is $24, we find the quantity where the combined MB equals $24. Since each individual's MB for 8 units is $12, combined, they equal $24 (12+12), matching the MC. Therefore, 8 units of the public good would maximize society's welfare.

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