Question
Suppose there are three consumers of a public good with the following marginal benefits of consumption related to the quantity of the public good provided:
Suppose there are three consumers of a public good with the following marginal benefits of consumption related to the quantity of the public good provided:
Consumer 1: MB1 = 5 2Q
Consumer 2: MB2 = 4 Q
Consumer 3: MB3 = 3 Q
Calculate and draw the total marginal benefit function of the public good in a fully labelled diagram. If the marginal cost of producing the public good is MC = 2Q, what is the efficient quantity and how much should each consumer contribute to its provision if it were to provided at the efficient level (assuming the non-rival and non-excludable problems could be resolved)?
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