True/False Explain If the marginal usage cost of a excludable good is zero, then it is...

Question

Question

True/False Explain

If the marginal usage cost of a excludable good is zero, then it is optimal to charge an admission fee.

business economics

Answer 1

Answer #1

True

when the marginal usage cost is zero then marginal benefit should also be zero from the last unit consumed for total surplus to be maximised

And when only an admission fee is charged then consumer will consume the good until the marginal benefit is zero from the last unit consumed.

Answer 2

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