Consider an Economy with Three Consumers, Each with a Marginal

question 7

Multiple Choice

Consider an economy with three consumers, each with a marginal benefit for a public good of MB = 10 - q.If the marginal cost of providing the good is $15 per unit, what is the efficient level of output?

• A)30
• B)20
• C)10
• D)5
• E)15

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Definitions:

Federal Gasoline Tax

A tax imposed by the federal government on the sale of gasoline, primarily used to fund transportation projects.

Air Pollution

The presence of substances in the atmosphere that are harmful to the health of humans and other living beings, or cause damage to the climate or to materials.

Miles Driven

The total distance traveled by a vehicle, typically measured in miles.

External Benefit

An advantage or positive effect on a third party or society at large, resulting from an economic transaction or activity, not accounted for in the market price.