Consider an economy consisting of three people – A, B, and C. Person i (where i is A, B, or C) has the utility function where z is the quantity of public good provided and ci is person i’s consumption of private goods. Person i’s income yi is divided between consumption of the private good and his contribution to the financing of the public good. Person i’s contribution is the product of his “tax price” ti and the quantity of the public good, so Person A’s income is 90, person B’s income is 120 and person C’s income is 150. Twenty units of private good must be given up to produce each unit of public good. Find the Lindahl equilibrium
Consider an economy consisting of three people – A, B, and C. Person i (where i is A, B, or C) has the utility function where z is the quantity of public good provided and ci is person i’s consumption of private goods. Person i’s income yi is divided between consumption of the private good and his contribution to the financing of the public good. Person i’s contribution is the product of his “tax price” ti and the quantity of the public good, so Person A’s income is 90, person B’s income is 120 and person C’s income is 150. Twenty units of private good must be given up to produce each unit of public good. Find the Lindahl equilibrium
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Consider an economy consisting of three people – A, B, and C. Person i (where i is A, B, or C) has the utility function
where z is the quantity of public good provided and ci is person i’s consumption of private goods. Person i’s income yi is divided between consumption of the private good and his contribution to the financing of the public good. Person i’s contribution is the product of his “tax
Person A’s income is 90, person B’s income is 120 and person C’s income is 150. Twenty units of private good must be given up to produce each unit of public good. Find the Lindahl equilibrium
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