The government should provide an additional unit of a public good if ________.
A) the marginal cost of providing the additional unit of the good equals the social cost of providing the additional unit
B) the marginal cost of providing the additional unit of the good exceeds the marginal benefit
C) the marginal benefit exceeds the marginal cost of providing the additional unit of the good
D) the marginal cost of providing the additional unit of the good exceeds the average cost of providing the additional unit

Question

Quizplus · Accepted Answer

The government should provide an additional unit of a public good if the marginal benefit exceeds the marginal cost of providing the additional unit of the good. This means that the additional unit will provide more benefits to society than it costs to produce. Choice A is incorrect because it does not consider the marginal benefit. Choice B is incorrect because it implies that providing the additional unit offers no benefits, which is not necessarily true. Choice D is incorrect because it is not a relevant factor in determining whether to provide an additional unit of a public good.

The Government Should Provide an Additional Unit of a Public