Question
There are three consumers of a public good. Their individual demands are as follows: P1 = 50-G P2 => P3 = 110-G 150 -
There are three consumers of a public good. Their individual demands are as follows: P1 = 50-G P2 => P3 = 110-G 150 - G, where G measures the number of units of the good and p; is the price in dollars. MSC of the public good is $190 per unit. (a) (5 points) What is the optimal level of provision of the public good according to the Samuelson condition? (b) (5 points) Explain why the public good may not be supplied at all under voluntary contribution.
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