Question

Alex, Kara, and Susie are the only three people in a community. Alex is willing to pay $20 for the fifth unit of a public good, Kara, $15; and Susie, $25. Government should produce the fifth unit of the public good if the marginal cost is less than or equal to:________
a) $25.
b) $15.
c) $60.
d) $20.

Answer 1

Answer:

a) $25 is the correct answer.

Explanation:

Those are the only three people in the community. Susie is willing to pay $25 and everyone else is willing to pay less than that.