Scenario: Private and External Benefits a Small Community Finds That

question 214

Multiple Choice

Scenario: Private and External Benefits A small community finds that tidy lawns and neighborhoods provide both private and external benefits.They determine that the marginal private benefit (MPB) of lawns can be represented by the following equation: MPB = 50 - 0.5Q, where Q is the number of hours spent on keeping lawns tidy.The marginal private cost (MPC) of such lawn upkeep is represented by the following equation: MPC = 0.5Q, where Q is again the number of hours engaged in lawn upkeep.
(Scenario: Private and External Benefits) Based on the information provided in the scenario Private and External Benefits, how many hours of lawn upkeep will occur in this community, and what will be the marginal private benefit of such upkeep?

• A)50 hours; $50
• B)45 hours; $20
• C)50 hours; $25
• D)100 hours; $50

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