Use the Following to Answer Questions

question 175

Multiple Choice

Use the following to answer questions:
Scenario: Alexander and Vanessa
Alexander and Vanessa benefit from scientific research. Alexander's marginal private benefit from such research is given by the equation P = 200 - Q, where Q refers to the amount of research undertaken and P is the price Alexander is willing to pay for such research. Vanessa's marginal private benefit from such research is given by the equation P = 100 - Q. The marginal social cost of engaging in such research is constant at $100.
-(Scenario: Alexander and Vanessa) Refer to the scenario Alexander and Vanessa. If the socially optimal level of scientific research is produced and if both Vanessa and Alexander are truthful in disclosing the marginal private benefits they expect to receive from this research, what is the price per unit of research that Vanessa is willing to pay?

• A) $0
• B) $50
• C) $100
• D) $300

---

Definitions:

Free Rider Effect

A phenomenon where some individuals benefit from resources or services without contributing to the cost, often seen in team or group settings.

Team Incentives

Reward systems designed to motivate team performance by offering benefits or compensation based on achieving collective goals or benchmarks.

Piece Rates

A payment method where workers are paid a fixed rate for each unit of production completed, encouraging productivity and efficiency.

Incentive Systems

Programs designed to motivate and reward employees for reaching or exceeding performance targets.