When the optimal quantity of this good is provided the Jill's willingness to pay for the good is:
A)4
B)12
C)48
D)2

Question

Quizplus · Accepted Answer

The optimal quantity is where the marginal cost is equal to the marginal benefit (in this case, willingness to pay). At a quantity of 3, the marginal cost is $16, which is equal to Jill's willingness to pay of $48. Therefore, providing 3 units of the good is the best choice and Jill's willingness to pay at that quantity is $48.

When the Optimal Quantity of This Good Is Provided the Jill's