Pam and Kunal Are the Only Members of a Community

question 10

Multiple Choice

Pam and Kunal are the only members of a community that is trying to determine how much of the public good should be produced.Suppose that Pam is willing to pay $10 for the fourth unit of the public good and that Kunal is willing to pay $6 for the fourth unit.The marginal cost of producing the public good is constant at $4.Which of the following is TRUE?

• A) Fewer than four units of the public good should be produced.
• B) More than four units of the public good should be produced.
• C) Exactly four units of the public good should be produced.
• D) The Lindahl equilibrium is established when the price of the public good is $10.

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Definitions:

Age

A measure of time that an individual or entity has existed, usually expressed in years.

Intrinsic Reward

A reward that is internalized and personal to the individual, such as satisfaction or enjoyment from performing a task.

Raise

An increase in salary or wages typically given to employees as recognition for their work performance or length of service.

Sensory Sharpness

The acuity or clarity of sensory perception, including vision, hearing, touch, taste, and smell.