Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider an economy with a private good and public good. The economy consists of two consumers whose utility functions are: u1(x1, y) = 1 2

Consider an economy with a private good and public good. The economy consists of two consumers whose utility functions are: u1(x1, y) = 1 2 ln x1 + 1 2 ln y and u2(x2, y) = 1 3 ln x2 + 2 3 ln y. The endowment of consumer 1 is w1 = 2, and the endowment of consumer 2 is w2 = 3, both in units of private goods. The production of public good uses the linear technology y = z.

1. What is the voluntary contributions equilibrium.

2. What is the Lindahl equilibrium.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Managing in a Global Economy Demystifying International Macroeconomics

Authors: John E. Marthinsen

2nd edition

128505542X, 978-1305176157, 1305176154, 978-1285055428

More Books

Students also viewed these Economics questions

Question

Do not go, wait until I come

Answered: 1 week ago

Question

Pay him, do not wait until I sign

Answered: 1 week ago