Question

If the marginal benefit of one more unit of a public good is $500 for Sam and $300 for Alex, the social benefit of one more unit of a public good is: Group of answer choices $300 since the benefit will go to the person who values it least. $800 since the benefit of one more unit goes to both individuals. $400 since that is the average benefit. $500 since the benefit will go to the person who values it most.

Answer 1

Answer: $800 since the benefit of one more unit goes to both individuals.

Explanation:

The benefit of one more public good will go to both Sam and Alex. For this reason, the total benefit is the sum of the benefits that go to the both of them.

Sam benefits $500 and Alex benefits $300.

= 300 + 500

= $800

$800 goes to the both of them and so is the social benefit of one more unit of the public good.