Answer the next question on the basis of the following information is for public good.P_a and P_b represent the prices that citizens (a) and (b), the only two people in this nation, are willing to pay for additional units of a quantity (Q_c) of the public good.Q_s represents the quantity of the public good supplied by government at each of the collective prices.In equilibrium, the marginal benefit and cost of the public good will be: A)$7 B)$6 C)$5 D)$3

Question

Quizplus · Accepted Answer

In equilibrium, the marginal benefit and cost of the public good will be equal. From the given information, at the collective price of $6, both citizens are willing to pay for additional units of the public good. Therefore, the marginal benefit will be $6. And from the given information, at the quantity supplied of the public good, the marginal cost will be $6. Hence, the equilibrium price will be $6.

Answer the Next Question on the Basis of the Following