Question

Suppose that a small company is thinking of putting plants in their lobby for employees to view and enjoy. Since the plants are to be viewed by employees, the plants are non-excludable (it is infeasible to move a plant each time a specific individual walks by) and non-rival in consumption (if one worker looks at the plant, it does not prevent another from doing so as well).

The company employs three workers: Robin, Tyler, and Ray. The company is thinking about buying up to three plants, and wants to know how much workers would enjoy each plant. For Robin, the first plant has a benefit of $47 per day, the second plant has a benefit of $37 per day, and the third plant has a benefit of $13 per day. For Tyler, the first has a benefit of $41 per day, the second has a benefit of $28 per day, and the third has a benefit of $6 per day. For Ray, the first plant has a benefit of $31 per day, the second has a benefit of $19 per day, and the third has a benefit of $2 per day.
Given that no one else will see the plants, no one else values the plants in the lobby.
1) What is the marginal social benefit of the first?
2) What is the marginal social benefit of the second plant?
3) What is the marginal social benefit of the third plant?

Answer 1

Marginal Social Benefit = The Sum of all individual Benefit.

The Marginal social benefit of the first plant = Sum of first plant benefit of Robin, Tyler, and Ray

1. The marginal social benefit of the first = $47 + $41 + $31 = $119

2. The marginal social benefit of the second = $37 + $28 + $19 = $84

3. The marginal social benefit of the third = $13 + $6 + $2 = $21