Question

Consider an economy with just two citizens. If Sanjay's marginal benefit from an hour of mosquito control efforts is $10 and Anjali's marginal benefit is $25, then the optimal number of hours of a public good like mosquito control occurs when the marginal cost of an additional hour of mosquito control is: $17.50. $10.00. $25.00. $35.00.

Answer 1

Answer: $35.00

Step-by-step explanation:

The optimal quantity of a public good simply occurs when the demand which is the marginal benefit curve and the supply which is the marginal cost curve intersects

In this case, the marginal social benefit will be:

= Sanjay's marginal benefit + Anjali's marginal benefit

= $10 + $25 = $35.

Therefore, the answer to the question is $35.