1. Consider two consumers who each choose how to split their income, m, between a private good, x, and a public good. The amount of public good consumer į buys is denoted by g, and the total amount of public good is G. The price of each good is 1 and the consumer's utility functions are as below: u, = 2log(x) + log(G) u₂ log(x₂)+log(G) a) By referring to the utility functions, explain why good G satisfies the definition of a public good.

1. Consider two consumers who each choose how to split their income, m, between a private good, x, and a public good. The amount of public good consumer į buys is denoted by g, and the total amount of public good is G. The price of each good is 1 and the consumer's utility functions are as below: u, = 2log(x) + log(G) u₂ log(x₂)+log(G) a) By referring to the utility functions, explain why good G satisfies the definition of a public good.

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter22: Frontiers Of Microeconomics

Section: Chapter Questions

Problem 8PA

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