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1.Suppose you have two people in an economy, Ms. Hundley and Mr. McKenna, who want to produce a public good, S . Suppose we calculate
1.Suppose you have two people in an economy, Ms. Hundley and Mr. McKenna, who want to produce a public good,S. Suppose we calculate the Lindahl equilibrium using the method in your textbook. In this case, the demand curve for Ms. Hundley isS=P1/2. The demand curve for Mr. McKenna isS= 8/P. If the marginal social cost of the project is 10, what is the Lindahl equilibrium quantity ofS? What are the Lindahl prices?
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