Question

the marginal cost of producing 40 units of a public good is $200. there are two individuals in the society. person a is willing to pay $80 for 40 units of the public good. if 40 units of the public good are provided, how much must person b be willing to pay? $0 $80 $120 $150

Answer 1

The volume of output and the price per unit of a product that will maximize profits are determined by economic metrics such as the marginal cost of production and marginal revenue. The link between marginal revenue and marginal cost of production, which a business constantly aims to maximize.

Person B needs to be prepared to pay $120.

Marginal expense is $200.

Individual A is prepared to pay = $80

The expense a business incurred to produce one extra unit of products is known as the marginal cost. If person A paid $80, then person B is required to pay an amount equal to the marginal cost the business incurred. B, will pay $120.

Yes, Person B must be prepared to spend enough money to cover the product's marginal cost. Do not forget that the marginal cost, not the sales cost, is the price per unit of a product. The marginal cost should therefore be covered by the overall value paid.

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