Alex, Kara, and Susie Are the Only Three People in a Community

question 192

Multiple Choice

Alex, Kara, and Susie are the only three people in a community. Alex is willing to pay $40 for the third unit of a public good; Kara is willing to pay $25. If the marginal cost of producing the third unit is $80, what is the minimum amount that Susie must be willing to pay for it to be efficient for government to produce the third unit?

• A)The amount cannot be determined with the information provided.
• B)$80
• C)$15
• D)$65
• E)$95

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Definitions:

Covert Observation

A research method in which the subjects are not aware they are being observed in order to study behaviors in natural settings.

Systematically Recapturing

Involves regularly revisiting and reviewing data or processes to ensure accuracy and comprehensiveness over time.

Small Group

A social unit consisting of a few people (usually not more than ten), allowing for close and mutual interaction.