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Consider the file named HWS8 Public Goods. It shows the marginal private benefits (MPB) derived by three citizens from different units of a public good
Consider the file named HWS8 Public Goods. It shows the marginal private benefits (MPB) derived by three citizens from different units of a public good such as a fire station, another military base, or a new freeway. It also shows the marginal social costs of building these goods. Suppose that when the government employees survey the citizens about their preferences for the public good, every citizen understates his or her marginal private benefit for every unit of the good by $20. In that case, the survey results would mistakenly indicate that the allocatively efficient number of the public good is Use our general rounding rule. Citizen 1's MPB $25 $24 $23 $22 $21 $20 $19 $18 $17 $16 0 2 3 5 6 7 8 Citizen 2's MPB $27 $26 $25 $24 $23 $22 $21 $20 $19 $18 0 1 2 3 5 6 7 8 Citizen 3's MPB $51 $50 $49 $48 $47 $46 $45 $44 $43 $42 $41 $40 $39 $38 $37 0 2 3 4 5 6 7 8Marginal Social Cost $92 $88 $84 $80 $76 $72 $68 $64 $60 $56 $52 $48 $44 $40 $36 $32 $28 $24 $20 $16 0 2 3 4 5 6 7 8
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