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LeBron James and Kevin Durant enjoy watching Cable TV, a public good. LeBron's demand for Cable TV is Q = 30 - 1/2MB, where Q
LeBron James and Kevin Durant enjoy watching Cable TV, a public good. LeBron's demand for Cable TV is Q = 30 - 1/2MB, where Q is the number of Cable TV channels. Kevin's is Q = 45 - 1/2MB. MB stands for marginal benefit. The marginal cost of getting the street plowed is $60.
- In general, is Cable TV an excludable good? Is it non-rival? Explain.
- Sketch the individual and aggregate marginal benefit curves and the marginal cost curve.
- Calculate the efficient number of Cable TV channels, Q, and identify the efficient point in your graph.
- If marginal cost is 10, what is now the efficient number of Q. Graph your answer.
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