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QUESTION / Fairy sprinkles is considered a public good in Little Kingdom. The demand curves of the only two consumers - Ben and Holly -
QUESTION / Fairy sprinkles is considered a public good in Little Kingdom. The demand curves of the only two consumers - Ben and Holly - are given in the diagram below. The vertically summed demand Price ($) Dsocial DHolly (DSocial) and the marginal cost (MC) are also given. The diagram is not drawn to scale. 18 13.5 DBen 9 MC 6 Quantity 2 11 14 If the Little Kingdom provides the socially optimal amount of fairy sprinkles and charges Ben and Holly their Lindahl prices, it should produce units of fairy sprinkles, charge Ben and Holly O 2 ... $9/unit ... $18/unit O 11 ... $9/unit ... $13.5/unit O 13 ... $9/unit ... $9/unit O 14 ... $3/unit ... $6/unit
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