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 $8,how many units of the public good will be provided by the private market?
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 $8,how many units of the public good will be provided by the private market?
A)0 
B)8 
C)12 
D)16

Quizplus · Accepted Answer

In order for the private market to provide units of the public good, the marginal cost must be equal to the sum of the individual marginal benefits at that quantity. At a quantity of 12 units, the sum of individual marginal benefits is $96, which is equal to the marginal cost of $8 per unit multiplied by 12 units. Therefore, the private market will provide 12 units of the public good.

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