Question
Bill's demand for months of Netflix Q(a private good) is Q = 20 - 2P and Ted's demand for months of Netflix Q is Q
Bill's demand for months of Netflix Q(a private good) is Q = 20 - 2P and Ted's demand for months of Netflix Q is Q = 10 - P.
a. Write down an equation for the SMB of the consumption of Netflix consumption.
b. Now suppose that months of Netflix is a public good because Ted just logs into Bill's account. Write down an equation for the SMB benefit of Netflix month consumption.
c. Assuming that the supply curve for Netflix months is Q = -2.5 + P what is the optimal number of months for society to produce/consumer?
d.What would be the Lindahl prices associated with the optimal level of public good?
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