Suppose That Mick and Cher Are the Only Two Members

question 164

Multiple Choice

Suppose that Mick and Cher are the only two members of society and are willing to pay $10 and $12, respectively, for the fifth unit of a public good. Also, assume that the marginal cost of the fifth unit is $23. We can conclude that

• A)the fifth unit should be produced.
• B)the fifth unit should not be produced.
• C)zero units should be produced.
• D)3 units should be produced.

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Definitions:

Freshwater

Refers to water bodies like lakes, rivers, and ponds that have low salt concentrations compared to seawater.

Scarce

In short supply; a resource is scarce when there is not enough of the resource available to satisfy all the various ways a society wants to use it.

Physical Capital

The tangible assets that are used in the production of goods and services, including buildings, machinery, and equipment.

Dinner

The main meal of the day, traditionally eaten in the evening.