Sue and Mark Are the Only Two Members of a Community.Sue's

question 139

Multiple Choice

Sue and Mark are the only two members of a community.Sue's marginal benefit from one lighthouse is $2,000 and Mark's marginal benefit is $1,000.If the marginal cost of one lighthouse is $2,500 and if a lighthouse is a public good,then for efficiency the lighthouse should

• A) be built but only Sue should be allowed to use it.
• B) be built but only Mark should be allowed to use it.
• C) be built and both Sue and Mark should be allowed to use it.
• D) not be built because its marginal cost exceeds Sue's marginal benefit.
• E) not be built because its marginal cost exceeds both Sue's and Mark's marginal benefit.

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Definitions:

Gini Ratio

A statistical measure used to represent the income or wealth distribution of a nation's residents, indicating economic inequality.

Highest Quintile

The top 20 percent segment of a population sorted by income, wealth, or another metric.

Total Income

The accumulation of all sources of revenue, including wages, salaries, interest, dividends, and other earnings.

Income Distributions

The way in which total income is divided among the owners of different factors of production or households in an economy.