The benefit of an additional unit of a public good is:

• A. The highest price someone would pay for it
• B. The lowest price someone would pay for it
• C. The sum of the reservation price of all the people who use it
• D. None of the above

Answer: (C)

Verified step by step guidance

1. Understand the concept of a public good: A public good is non-excludable and non-rivalrous, meaning that individuals cannot be effectively excluded from its use, and one person's use does not reduce availability to others.
2. Identify the benefit of an additional unit of a public good: The benefit is not just the highest or lowest price someone would pay, but rather the total value derived by all users.
3. Recognize the concept of reservation price: The reservation price is the maximum price an individual is willing to pay for a good or service.
4. Calculate the total benefit of an additional unit of a public good: This is done by summing up the reservation prices of all individuals who use the public good.
5. Conclude that the correct answer is the sum of the reservation prices of all the people who use the public good, as this reflects the total benefit to society of providing an additional unit.