Consider two consumers with the following demand functions for a public good.P1 = 10 - 0.1GP2 = 20 - 0.1Gwhere P1 is the price that person 1 is willing to pay for quantity G and P2 is the price that person 2 is willing to pay for quantity G What is the optimal level of the public good if the marginal cost of the public good is Ksh. 25.What is the total cost of producing the optimal quantityhow much does each person contribute towards the cost

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Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter5: Difficult Cases For The Market And The Role Of Government

Section: Chapter Questions

Problem 10CQ

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Consider two consumers with the following demand functions for a public good.

P1 = 10 - 0.1G

P2 = 20 - 0.1G

where P1 is the price that person 1 is willing to pay for quantity G and P2 is the price that person 2 is willing to pay for quantity G

What is the optimal level of the public good if the marginal cost of the public good is Ksh. 25.
What is the total cost of producing the optimal quantity
how much does each person contribute towards the cost

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