On the basis of the three individual demand schedules in the following table, and assuming these are the only three people in thesociety, determine (a) the market demand schedule on the assumption that the good is a private good and (b) the collective demandschedule on the assumption that the good is a public good.Instructions: Enter your answers as a whole number.Individual 1Individual 2Individual 3(a) Private Demand(b) Public DemandPriceQdPriceQdPriceQdPriceQdPriceQd$160$161$160$161140142s14014212012101108286364442523456781211231021048+385646645472628

Quantity demand (Qd)= individual 1 + individual 2 + individual 3Price for public demand is…

Answered: On the basis of the three individual…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter11: Public Goods And Common Resources

Section: Chapter Questions

Problem 2PA

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Externalities - Definition and examples An externality arises when a firm or person engages in an activity that affects the wellbeing of a third party, yet neither pays nor receives any compensation for that effect. If the impact on the third party is adverse, it is called a ___________ externality. The following graph shows the demand and supply curves for a good with this type of externality. The dashed drop lines on the graph reflect the market equilibrium price and quantity for this good.
On the basis of the three Individual demand schedules below, and assuming these three people are the only ones in the society, determine (a) the market demand schedule on the assumption that the good is a private good and (b) the collective demand schedule on the assumption that the good is a public good Instructions: Enter your answers as whole numbers (in the gray-shaded cells). Individual #1 Individual #2 Individual #3 (a) Private Demand (b) Public Demand Od Qd Price Qd Price Qd Price Price Qd Price $8 $8 $8 $8 1 1 7 2 7 2 7 2 7 2 6 3 6 3 6 3 6 3 4 4 4 4 5 5 5 4 5 5 4 5 4 5 4 3 6 6 6 3 6 2 7 2 7 2 7 2 7 1 8 1 8 1 8 1 8
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a. On the basis of the three individual demand schedules below, and assuming these three people are the only ones in the society. determine the collective demand schedule on the assumption that the good is a public good. Instructions: Enter your answers as a whole number. Individual 2 Individual 3 Demand for Public Good Individual 1 Qd Price Qd Price Qd Price Qd Price $16 $16 $16 1. 14 2. 14 2. 14 3. 12 3. 3. 12 3 12 10 4. 10 10 8. 6. 6. 6. 7. 7. 4. 4. 8. 8. 2. 8. 2. 2 b. Use the public demand schedule above and the following supply schedule to ascertain the optimal quantity of this public good. 10 Optimal quantity 56740

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