QUESTION 24 Consider the following provision of public good problem: Citizen 1 initial budget: w1 = 80,000 $ Citizen 2 initial budget: w2 = 60,000 S Cost of public good: C = 40,000 Citizen 1 Utility Function: U1(x1 g) = 3(x1) +90,000g Citizen 2 Utility Function: U2(x2, g) = 2(x2) + 60,000g Notation: xi is the budget that citizen i spends on goods other than the public good; g is a public good indicator variable which takes on the value 1 when the public good is provided and zero otherwise. Given this information, the level of utility of citizen 1 when 1 pays and 2 free-rides will be (type it using two decimal places and no thousand separator, e.g. 200000.00):

QUESTION 24 Consider the following provision of public good problem: Citizen 1 initial budget: w1 = 80,000 $ Citizen 2 initial budget: w2 = 60,000 S Cost of public good: C = 40,000 Citizen 1 Utility Function: U1(x1 g) = 3(x1) +90,000g Citizen 2 Utility Function: U2(x2, g) = 2(x2) + 60,000g Notation: xi is the budget that citizen i spends on goods other than the public good; g is a public good indicator variable which takes on the value 1 when the public good is provided and zero otherwise. Given this information, the level of utility of citizen 1 when 1 pays and 2 free-rides will be (type it using two decimal places and no thousand separator, e.g. 200000.00):

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

suppose the government of a desert community wants to punish excessive water useage, where "excessive" is defined as any usage greater than 100 gallons/week. to do this, the government paces a flat $100 income tax on anyone who consumes more than 100 gallons/week of water in any given week (so this tax could theoretically be levied 52 times per year). people who use less than 100 gallons of water each week will not face this $100 special tax. For these problems, consider the decisions between water consumption, X(sub)w and consumption of a composite good, X(sub)c, where P(sub)w =$2/gallon and the composite good's price is numeraire. suppose michael lives in this desert community and has a weekly income of $1000. 1. graphing michels budget contraint over (X(sub)w , X(sub)c) bundles, what is the slope of his budget conraint for bundles containing MORE than 100 gallons of water? 2. What is the slope of michaels budget constraint at the point (X(sub)w, X(sub)c)=(100,750)? 3. what is the…
Suppose there are two consumers A and B, and two goods x and y. A's utility function has the following form UA = XA - (XB)1. Which of the following is true? Consumer A's consumption of good x exhibits a negative externality. Consumer A's consumption of good x exhibits a positive externality. Consumer B's consumption of good x exhibits a negative externality. Consumer B's consumption of good x exhibits a positive externality.
Assume that the price per hamburger is $2.50. The incremental value to you of each hamburger is described in the table below. If you are seeking to maximize total net gains from hamburgers, how many hamburgers should you purchase? Pairs of jeans Marginal Benefit 1 $8.00 2 $6.00 3 $4.00 4 $2.00 5 $0.00 Group of answer choices 3 2 4 5 1
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.
Brian and Edison are considering contributing toward the creation of a public park. Each can choose whether to contribute $400 to the public park or to keep that $400 for a cell phone. Since a public park is a public good, both Brian and Edison will benefit from any contributions made by the other person. Specifically, every dollar that either one of them contributes will bring each of them $0.80 of benefit. For example, if both Brian and Edison choose to contribute, then a total of $800 would be contributed to the public park. So, Brian and Edison would each receive $640 of benefit from the public park, and their combined benefit would be $1,280. This is shown in the upper left cell of the first table. Since a cell phone is a private good, if Brian chooses to spend $400 on a cell phone, Brian would get $400 of benefit from the cell phone and Edison wouldn't receive any benefit from Brian's choice. If Brian still spends $400 on a cell phone and Edison chooses to contribute $400 to the…
Suppose your total benefits of renting x DVD's next month is: -²2² +14x+50 The cost of renting a DVD is $2, and so the total cost of renting x DVD's is $2x. Calculate your net benefit from watching 1, 2...8 DVDs. Complete column (2). (Enter your responses as integers.) (1) DVDs Rented 0 1 N345678 2 (2) Total Net Benefit