Table 11-2
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.

$$\begin{array} { l l l l l }
\hline \text { Hours } & \text { John } & \text { James } & \text { Mary } & \text { Lydia } \
\hline 1 & \$ 30 & \$ 50 & \$ 40 & \$ 10 \
2 & 25 & 40 & 37 & 9 \
3 & 20 & 30 & 34 & 8 \
4 & 15 & 20 & 30 & 7 \
5 & 9 & 10 & 25 & 6 \
6 & 3 & 0 & 15 & 5 \
7 & 0 & 0 & 5 & 4 \
\hline
\end{array}$$
-Refer to Table 11-2. Suppose the cost to clean the lake is $8 per hour and that the residents have agreed to split the cost of cleaning the lake equally. The number of cleaning hours that maximizes total surplus of Widgetapolis is 7 hours.

Question

Table 11-2
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.
​
 $$\begin{array} { l l l l l } 
\hline \text { Hours } & \text { John } & \text { James } & \text { Mary } & \text { Lydia } \
\hline 1 & \$ 30 & \$ 50 & \$ 40 & \$ 10 \
2 & 25 & 40 & 37 & 9 \
3 & 20 & 30 & 34 & 8 \
4 & 15 & 20 & 30 & 7 \
5 & 9 & 10 & 25 & 6 \
6 & 3 & 0 & 15 & 5 \
7 & 0 & 0 & 5 & 4 \
\hline
\end{array}$$ ​
-Refer to Table 11-2. Suppose the cost to clean the lake is $8 per hour and that the residents have agreed to split the cost of cleaning the lake equally. The number of cleaning hours that maximizes total surplus of Widgetapolis is 7 hours.

Quizplus · Accepted Answer

The total surplus is maximized when the marginal cost of cleaning the lake is equal to the marginal benefit of cleaning the lake. The marginal cost of cleaning the lake is $8 per hour, and the marginal benefit of cleaning the lake is the sum of the willingness to pay of all four residents for each hour of cleaning. The table shows that the sum of the willingness to pay of all four residents for 7 hours of cleaning is $120, which is greater than the marginal cost of cleaning the lake. Therefore, the number of cleaning hours that maximizes total surplus of Widgetapolis is 7 hours.

Table 11-2 Consider the City of Widgetapolis with Only Four

Table 11-2
Consider the City of Widgetapolis with Only Four