Suppose the Marginal Cost of the Fourth Unit of a Public

question 20

Multiple Choice

Suppose the marginal cost of the fourth unit of a public good is $20. If Mark and Judy are the only members of society, and they are willing to pay $10 and $11, respectively, for the fourth unit of the good, then the efficient quantity is

• A) 4 or more units.
• B) zero units.
• C) 3 units.
• D) More information is needed about the marginal benefits of the first, second and third units of the public good.
• E) None of the above answers is correct.

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Definitions:

Mediation

A form of alternative dispute resolution where a neutral third party, the mediator, helps disputing parties find a mutually satisfactory solution.

Dispute

A disagreement or argument about something important.

Compel Arbitration

A legal process where a court requires disputing parties to resolve their issues through arbitration rather than litigation.

Arbitrated

Having disputes settled through arbitration, which is a form of alternative dispute resolution involving an impartial third party to make binding decisions.