There are 2 people in a community, A and B. The function of the demand for public goods from each of these individuals is: P₁ = 100 - G P₂ = 140 - G where P is the maximum price level that each individual is willing to pay for each unit of public good G. Marginal costs for the production of each unit of public good are constant 120 Tokens. a. Illustrate in a graphical analysis the function of demand and supply (supply) of this public good. What is the efficient provision of public goods G? Describe the prerequisites for the efficient condition (supply) of public goods. b. Determine the Lindahl price for individual A and individual B. c. If later, individual C joins the community, with PC = 30 - G. Will Individual C contribute to the provision of the public goods? Explain.

There are 2 people in a community, A and B. The function of the demand for public goods from each of these individuals is: P₁ = 100 - G P₂ = 140 - G where P is the maximum price level that each individual is willing to pay for each unit of public good G. Marginal costs for the production of each unit of public good are constant 120 Tokens. a. Illustrate in a graphical analysis the function of demand and supply (supply) of this public good. What is the efficient provision of public goods G? Describe the prerequisites for the efficient condition (supply) of public goods. b. Determine the Lindahl price for individual A and individual B. c. If later, individual C joins the community, with PC = 30 - G. Will Individual C contribute to the provision of the public goods? Explain.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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