4. Suppose that the economy contains three consumers, whose demand curves for the public good zare given byDI = 150/zD2 = 100/zD350/zThe cost per unit of z is c = 60.a) Find z*, the socially optimal level of z, .b) Compute the Lindahl taxes, which generate unanimous agreement on z*. Verify thateach consumer prefers z* when faced with these taxes.

D1 = P1 = 150/z D2 = P2 = 100/z D3 = P3 = 50/z Cost per unit of z = 60 In case of public good,…

Answered: 4. Suppose that the economy contains…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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