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 $100 per hour. How many hours should be spent cleaning the lake to maximize total surplus for the residents in Widgetapolis?
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 $100 per hour. How many hours should be spent cleaning the lake to maximize total surplus for the residents in Widgetapolis?
A)2 hours 
B)3 hours 
C)4 hours 
D)5 hours

Quizplus · Accepted Answer

The marginal benefit of cleaning the lake is $100 per hour, and the marginal cost is also $100 per hour. Therefore, the optimal number of hours to clean the lake is 2 hours, where the marginal benefit equals the marginal cost.

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