Multiple Choice
If the distribution of water is a natural monopoly, then which of the following is most likely true?
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8. The Types of Goods
Public Goods: Demand Curve and Optimal Quantity
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Two roommates plan to spend their evening with a marathon of Saw horror movies. Because it is a marathon, they must start with the first movie in the series and continue in order. Their willingness to pay for the rental of each movie is as follows:The marginal benefit from renting the third movie is:
A
\$36
B
\$8
C
\$5
D
\$3
Verified step by step guidance1
Identify the willingness to pay for each movie by both roommates from the table provided. For Saw III, Ricky is willing to pay \$5 and Martin is willing to pay \$3.
Calculate the total willingness to pay for the third movie by adding the amounts both roommates are willing to pay: \$5 (Ricky) + \$3 (Martin).
The total willingness to pay for the third movie represents the total marginal benefit from renting the third movie.
Compare the calculated total marginal benefit with the options provided in the problem to determine which one matches.
Understand that the marginal benefit is the additional benefit received from consuming one more unit of a good or service, in this case, the third movie.
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