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16 November, 18:37

Suppose the small town of Falls Valley has a mosquito problem. After a bad summer, the town accountants explain that the marginal cost of providing one more treatment for mosquito control is $100,000. The town should provide the additional mosquito control only if the marginal:

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  1. 16 November, 18:54
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    The town should provide the additional mosquito control only if the marginal benefit generated for the residents of Falls Valley is equal to or greater than $100,000.

    Explanation:

    The town must use the same logic as any business, they only increase their activities when MR ≥ MC, in this case the marginal revenue equals the benefits generated by the mosquito treatment.
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