Consider a product market with three consumers X, Y and Z with demand function PX = 6 - QX, PY = 12 - QY and PZ = 18 - QZ respectively, where P is the price in dollars and QX, QY and QZ are the quantities demanded by Consumer X, Y and Z respectively. If the product is public good, obtain the marginal social benefit function and draw the diagram. Determine the optimal quantity of the product in the market if the marginal cost of the product is constant at (a) $3, (b) $9 and (c) $21.
Consider a product market with three consumers X, Y and Z with demand function PX = 6 - QX, PY = 12 - QY and PZ = 18 - QZ respectively, where P is the price in dollars and QX, QY and QZ are the quantities demanded by Consumer X, Y and Z respectively. If the product is public good, obtain the marginal social benefit function and draw the diagram. Determine the optimal quantity of the product in the market if the marginal cost of the product is constant at (a) $3, (b) $9 and (c) $21.
Chapter16: Public Goods And Public Choice
Section: Chapter Questions
Problem 1.1P: (Optimal Provision of Public Goods) Using at least two individual consumers, show how the market...
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Consider a product market with three consumers X, Y and Z with demand function PX = 6 - QX, PY = 12 - QY and PZ = 18 - QZ respectively, where P is the
If the product is public good, obtain the marginal social benefit function and draw the diagram. Determine the optimal quantity of the product in the market if the marginal cost of the product is constant at (a) $3, (b) $9 and (c) $21.
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