1. Two people have demands for public good X, where X is unitsand P is price per unit:Person 1 demand: X1 = 30 - 0.5P1Person 2 demand: X2 = 20 - 0.5P2Marginal cost to provide another unit of X is MC = 40.%3Da. Find/write the equation to represent the total (social) marginalbenefit (demand) of X. In your answer, explain the difference betweenfinding the total (social) marginal benefit (demand) for a public goodcompared to a private good. (Note that these demand curves arewritten quantity as a function of price.). Graph the curves.b. Find the efficient total quantity of X to provide.c. Find the efficient "price" to charge each person.d. Why will the competitive market likely fail to provide the efficientquantity of a public good? Explain.

X1=30-0.5P1--- Demand curve of consumer 1X2=20-0.5P2--- Demand curve of consumer 2MC=40Thank you for…

Answered: 1. Two people have demands for public…

1. Two people have demands for public good X, where X is units and P is price per unit: Person 1 demand: X₁ = 30 - 0.5P1 Person 2 demand: X2 = 20 - 0.5P2 nt to provide another unit of X is MC = 40.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

1. Two people have demands for public good X, where X is units
and P is price per unit:
Person 1 demand: X1 = 30 - 0.5P1
Person 2 demand: X2 = 20 - 0.5P2
Marginal cost to provide another unit of X is MC = 40.
%3D
a. Find/write the equation to represent the total (social) marginal
benefit (demand) of X. In your answer, explain the difference between
finding the total (social) marginal benefit (demand) for a public good
compared to a private good. (Note that these demand curves are
written quantity as a function of price.). Graph the curves.
b. Find the efficient total quantity of X to provide.
c. Find the efficient "price" to charge each person.
d. Why will the competitive market likely fail to provide the efficient
quantity of a public good? Explain.

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National Public Radio (NPR) is a public good. The cost (supply) of each "unit" of NPR is P=2. Derek's valuation for each unit of NPR (demand) is given by PD=10-Q, and Kim's valuation is given by PK-4-0.25Q. The total social valuation (demand) of NPR is Ps= Q. The socially optimal amount of NPR is units. Without intervention, the private market would lead to an ♦ of NPR.