Multiple Choice
(Scenario: Private and External Benefits) Use Scenario: Private and External Benefits.The community decides that the marginal benefit to external parties from lawn upkeep is $15 and that it is important to maintain the socially optimal number of lawn upkeep hours.To achieve this goal,the community will: Scenario: Private and External Benefits
A small community finds that tidy lawns and neighborhoods provide both private and external benefits.They determine that the marginal private benefit (MPB) of lawns can be represented by the equation MPB = 50 - 0.5Q,where Q is the number of hours spent on keeping lawns tidy.The marginal private cost (MPC) of such lawn upkeep is represented by the equation MPC = 0.5Q,where Q is again the number of hours engaged in lawn upkeep.
A) require community lawn service of 45 hours.
B) subsidize everyone who contributes to lawn upkeep with a payment of $15.
C) implement a Pigouvian lawn tax of $65.
D) provide no additional funds to lawn upkeep.
Correct Answer:

Verified
Correct Answer:
Verified
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