Scott is a manager at a pool cleaning business. He has hired 10 workers to clean pools for him and is considering what type of payment scheme he should set up for his workers.
He can pay each of his workers 10 per hour to clean pools, or he can pay his workers 20 for each pool a worker cleans. (It takes 2 hours, on average, for an employee to clean a pool thoroughly.) If Scott wants to maximize the number of pools his workers clean in one day, which payment scheme should he use? Explain.
Question 2
One difference between the demand for a private good and that for a public good is that
A) with a private good, each consumer chooses the quantity she wants to consume but with a public good, everyone consumes the same quantity.
B) the marginal benefit from consuming the last unit of a public good always exceeds the marginal benefit from consuming the last unit of a private good because there are externalities in the consumption of the public good.
C) with a private good, each consumer receives different amounts of benefit from consuming the product but with a public good, every consumer realizes the same amount of benefit from consuming the product.
D) with a private good, each consumer chooses the quantity she wants to consume but with a public good, each consumer chooses the price she is willing to pay for a fixed quantity.
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