Answer the Question Based on the Following Information for a Public

question 116

Multiple Choice

Answer the question based on the following information for a public good. Pₐ and Pᵦ are the prices that individuals A and B are willing to pay for the last unit of a public good, rather than do without it. These people are the only two members of society. If the marginal cost of producing this good at the optimal quantity is $2, the optimal quantity must be

• A)5 units.
• B)3 units.
• C)1 unit.
• D)2 units.
• E)4 units.

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Definitions:

Existing Market

A market where products or services are already available and where a business may face competition upon entry.