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Consider a four-citizen community where the marginal private benefit of a public good G are: mpb1 = 1/G mpb2 = 2/G mpb3 = 3/G mpb4
Consider a four-citizen community where the marginal private benefit of a public good G are:
mpb1 = 1/G
mpb2 = 2/G
mpb3 = 3/G
mpb4 = 4/G
The marginal cost of the public good is $2. Calculate the efficient level of the public good G^E. Compute the benefit-tax liabilities per unit of G for the four citizens. Illustrate.
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