3. Public Goods: There are two consumers of fireworks, which are a public good. Amanda's benefit from fireworks is given by MBA = 100 – Q, where Q is the quantity of fireworks. Simeon's benefit is given by MBs = 60 – Q. a. Calculate the total marginal benefit, MBT. b. Suppose that fireworks can be provided at a marginal cost of MC = 2Q. Find the optimal number of fireworks. c. What does Amanda's MB equal at the optimal number of fireworks? Simeon's MB? What does MBT equal at the optimal number of fireworks? d. Graph Amanda’s MB, Simeon's MB, total marginal benefit, and the marginal cost. Illustrate your answers to parts (b) and (c) in your graph.
3. Public Goods: There are two consumers of fireworks, which are a public good. Amanda's benefit from fireworks is given by MBA = 100 – Q, where Q is the quantity of fireworks. Simeon's benefit is given by MBs = 60 – Q. a. Calculate the total marginal benefit, MBT. b. Suppose that fireworks can be provided at a marginal cost of MC = 2Q. Find the optimal number of fireworks. c. What does Amanda's MB equal at the optimal number of fireworks? Simeon's MB? What does MBT equal at the optimal number of fireworks? d. Graph Amanda’s MB, Simeon's MB, total marginal benefit, and the marginal cost. Illustrate your answers to parts (b) and (c) in your graph.
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter22: Frontiers Of Microeconomics
Section: Chapter Questions
Problem 9PA
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