Question
Consider three consumers indexed by i = {1,2,3} with the following demand functions for a public good G: 1 1 P = 10G, P
Consider three consumers indexed by i = {1,2,3} with the following demand functions for a public good G: 1 1 P = 10G, P = 10- G, P3 = 20 G 20 20 10 where P is the price consumer i is willing to pay for G. (a) (10 pts) If marginal cost is constant at $15, what is the private provision of public good G? (b) (10 pts) If marginal cost is constant at $15, what is the optimal level of public good?
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Macroeconomics Principles Applications And Tools
Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez
7th Edition
978-0134089034, 9780134062754, 134089030, 134062752, 978-0132555234
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