Hello, I have a question about economics. And this is the question: Which one of

Question

Hello, I have a question about economics. And this is the question:

Which one of the following is true for a competitive market?

A.For a private good everyone will consume the same amount but the marginal valuation on the last item consumed may be different for different individuals.

B.For a private good everyone can consume a different amount and the marginal valuation on the last item consumed will be different for different individuals.

C.For a public good everyone consumes the same amount and the marginal valuation on the last item consumed is the same for all individuals.

D.For a public good everyone can consume the same amount and the marginal valuation on the last item consumed can be different for all individuals.

The right answer is D, but why it is right? And why the others are incorrect?

Thank you very much.

Explanation / Answer

Solution: Option-D. For a public good everyone can consume the same amount and the marginal valuation on the last item consumed can be different for all individuals.

Explanation: Once the public good is produced, every person will be consuming the same amount however their willingness to pay will differ. When the good is a public good there is no requirement for the valuation of the last unit consumed to be equal for all individuals. However in the private goods the valuation of the marginal unit (which means the last unit consumed) would be same for everyone and this equals the prices of the good.

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