Sue and Mark Are the Only Two Members of a Community

question 37

Multiple Choice

Sue and Mark are the only two members of a community. Sue's marginal benefit from one lighthouse is $2,000 and Mark's marginal benefit is $1,000. If the marginal cost of one lighthouse is $2,500 and if a lighthouse is a public good, then for efficiency the lighthouse should

• A) be built, but only Sue should be allowed to use it.
• B) be built, but only Mark should be allowed to use it.
• C) not be built because its marginal cost exceeds Sue's marginal benefit.
• D) not be built because its marginal cost exceeds both Sue's and Mark's marginal benefit.
• E) be built and both Sue and Mark should be allowed to use it.

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Definitions:

Cannon-Bard Theory

The Cannon-Bard theory is a psychological model proposing that emotional feelings and physiological reactions to stimuli occur simultaneously and independently.

Arousal Theory

Arousal theory suggests that there is an optimal level of arousal necessary for the best performance of any task; too little or too much arousal can decrease performance efficiency.

Body Response

Physical reactions or changes in the body as a response to stimuli or conditions.

Brain Circuit

A set of neurons and their connections that work together to carry out a specific function or process in the brain.