Say a Public Good Is Provided to Two Consumers: John

question 5

Multiple Choice

Say a public good is provided to two consumers: John and Jill. John's willingness to pay for the good is P = 10 - Q, and Jill's is P = 20 - 2Q. The marginal cost to provide the good are 2Q. Assume the government must pay for providing this good by taxing Jill and John equally to raise the necessary revenue. When the optimal quantity of this good is provided, Jill's willingness to pay for the good is

• A)4.
• B)12.
• C)48.
• D)2.

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Definitions:

Revenue

The comprehensive sum of money a company makes from its primary business operations, namely selling goods or providing services.

Liabilities

A company's financial debts or obligations that arise during the course of business operations, required to be settled over time through the transfer of economic benefits.

Creditors

Individuals or entities to whom a company owes money or has financial obligations, typically arising from purchase of goods or services on credit.

Accounts Payable

A liability account tracking money owed by a business to suppliers or creditors for goods and services received.