2. Consider a society consisting with three individuals whose demand curves for a pure public good are Pa = 100-X, P = 110- X, P= 150- X for individual A, B, and C respectively. Marginal costs are constant and equal to $150 for each unit provided. (b) Suppose the government provided this output rate and taxed each person at a rate of $50/unit. Would the voters approve a referendum calling for a 5-unit reduction in X? Why or why not?

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2. Consider a society consisting with three individuals whose demand curves for a pure
public good are
Pa = 100-X, P = 110- X, Pe=150-X
for individual A, B, and C respectively. Marginal costs are constant and equal to $150
for each unit provided.
(b) Suppose the government provided this output rate and taxed each person at a
rate of $50/unit. Would the voters approve a referendum calling for a 5-unit
reduction in X? Why or why not?
Transcribed Image Text:2. Consider a society consisting with three individuals whose demand curves for a pure public good are Pa = 100-X, P = 110- X, Pe=150-X for individual A, B, and C respectively. Marginal costs are constant and equal to $150 for each unit provided. (b) Suppose the government provided this output rate and taxed each person at a rate of $50/unit. Would the voters approve a referendum calling for a 5-unit reduction in X? Why or why not?
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