4. There are two individuals, and two goods: private X and public G. The prices of both goods are equal to one. Individual i has income 12 and contributes G; towards the public good, so the total amount of the public good is G = G1 +G2. The remaining money goes towards public good, so X; = 12 – Gj. The utility function of individual i is G * X;. || a) What is the contribution to a public good of each individual if they contribute indepedendly? What is the total amount of the public good? b) What is the efficient contribution to a public good?

4. There are two individuals, and two goods: private X and public G. The prices of both goods are equal to one. Individual i has income 12 and contributes G; towards the public good, so the total amount of the public good is G = G1 +G2. The remaining money goes towards public good, so X; = 12 – Gj. The utility function of individual i is G * X;. || a) What is the contribution to a public good of each individual if they contribute indepedendly? What is the total amount of the public good? b) What is the efficient contribution to a public good?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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