Consider an Economy with Two Consumers, Each with a Marginal

question 3

Multiple Choice

Consider an economy with two consumers, each with a marginal benefit for a public good of MB = 20 - 1/2q.If the marginal cost of provision is $30 per unit, what is DWL in the market outcome?

• A)10
• B)20
• C)30
• D)40
• E)50

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Definitions:

Equivalent

Equal in value, measure, force, effect, significance, etc. Often used in mathematical, scientific, and logical comparisons.

Apothecary Equivalent

A term referring to the system of weight and volume measurement used historically in pharmacies and the science of pharmacy.

Fluid Ounce

A unit of volume typically used in measuring liquids, equivalent to approximately 28.4 ml in the British imperial system and 29.6 ml in the US system.

Thyroid

A gland in the neck that produces hormones regulating growth and development through the rate of metabolism.