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2. Consider the following market for a private good, where Anne and Beverly's inverse demand curves are given by PA:500Q PB:5002Q The marginal cost of
2. Consider the following market for a private good, where Anne and Beverly's inverse demand curves are given by PA:500Q PB:5002Q The marginal cost of this good is M C : 2Q (a) Calculate the market demand curve 2 points. (b) Depict this market graphically. 3 points. (c) Calculate the market price and quantity that will be produced, assuming this market is perfectly competitive. 3 points. (d) Argue that this outcome is Pareto Efficient. 2 points. (e) Suppose instead that this good is a pure public good. Costs and utilities are the same. What would the outcome of private pro- vision of this good be in that case? 5 points. (f) What would the efficient level of production be in that case? 5 points
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