Table 11-1
Consider the town of Springfield with only three residents, Sophia, Amber, and Cedric. The three residents are trying to determine how large, in acres, they should build the public park. The following table shows each resident's willingness to pay for each acre of the park.

-Refer to Table 11-1. Suppose the cost to build the park is $24 per acre. How many acres should the park be to maximize total surplus from the park in Springfield?
A)1 acre
B)2 acres
C)3 acres
D)4 acres

Question

Table 11-1
Consider the town of Springfield with only three residents, Sophia, Amber, and Cedric. The three residents are trying to determine how large, in acres, they should build the public park. The following table shows each resident's willingness to pay for each acre of the park.
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-Refer to Table 11-1. Suppose the cost to build the park is $24 per acre. How many acres should the park be to maximize total surplus from the park in Springfield?
A)1 acre 
B)2 acres 
C)3 acres 
D)4 acres

Quizplus · Accepted Answer

To maximize total surplus, the park should be built up to the point where the marginal cost of building the park ($24 per acre) equals the marginal benefit. Without the specific values from Table 11-1, we typically look for the acreage where the marginal benefit (the value or willingness to pay for an additional acre) drops to $24 or just below it. Since the correct answer is provided as 3 acres, it implies that at 3 acres, the marginal benefit equals or just exceeds the marginal cost of $24, maximizing total surplus.

Table 11-1 Consider the Town of Springfield with Only Three Residents, Sophia