Table 11-6 Consider the City of Widgetapolis with Only Four Residents, John

question 47

Multiple Choice

Table 11-6
Consider the city of Widgetapolis with only four residents, John, James, Mary, and Lydia. The four residents are trying to determine how many hours to spend in cleaning up the public lake. The table below shows each resident's willingness to pay for each hour of cleaning. ​
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-Refer to Table 11-6. Suppose the cost to clean the lake is $40 per hour and that the residents have agreed to split the cost of cleaning the lake equally. If it was decided that the lake will be cleaned for the number of hours that maximizes total surplus of Widgetapolis, how much individual surplus will Mary receive in total?

• A)-$10
• B)$15
• C)$25
• D)$116

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Definitions:

MR = MC Rule

A principle in economics where the optimal level of output is reached when marginal revenue equals marginal cost.

Price Taker

An individual or company that must accept prevailing prices in the market of its products or services, lacking the market power to influence prices on its own.

Break Even

The point at which total cost and total revenue are equal, resulting in no net loss or gain.

Minimum Output

refers to the lowest level of production that a company can sustain over the long term.