Question
New sidewalk for downtown Pretoria can be constructed in 100-yard sections. The new sidewalk will allow pedestrians to do business with some of the establishments
New sidewalk for downtown Pretoria can be constructed in 100-yard sections. The new sidewalk will allow pedestrians to do business with some of the establishments in town.The establishments have placed value on the new sidewalk, which diminishes as the length of the sidewalk increases. The Bike Shop values the first section at $4500, $7000 total for two sections and $8500 total for 3 sections. The Local Post Office values each section at $1000. The National Bank values the first 100 yards at $5000, the total for two sections at $8000, and the total for all three sections at $9000.
a) Explain in terms of rivalry and exclusion why the sidewalk could be considered a public good.
b) Derive a table showing the demand for each firm as well as the market demand for the sidewalk. (Quantity is sections of sidewalk)
c) Using the data from part b, construct a demand curve for the sidewalk sections. Include market and individual demand curves for the three establishments, all on the same graph.
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