Question

which of these statements regarding manufacturing and service firm is true?

A. Manufacturers are more spread out around the county than service fi

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 good is a private good and (b) the collective demand schedule on the assumption that the good is a public good. Responses go into the gray shad Instructions: Enter your answers as whole numbers Individual # Individual #3 | -$16 Individual #2 (a) Private Demand (b) Public Demand Price L Price $16 14 12 10 Qd Price is Willing to Pay - $16 14 12 10 $16 14 12 10 14 12 10 0 12 6 18 2 6 2 2 21 References eBook & Resources Learoing Oojectve: 04-03 Describe free rding and public goods, and illustrate why private frms cannot normally Numeric Response public goods.

Answer 1

Private goods are the goods which are excludable and rival in nature. in private good, total demand of a market is determined by horizontal summing of individual demand curves at each price Public goods are the goods which are non-excludable and non-rival in nature. To determine the socially optimal amount of the goods and services, the vertical summation has to be done of each individual's willingness to pay. Fill the missing blanks in the table. Individual 1 Individual 2 Individual 3 (a) Private demand (b) Public good Prices Qd Price Qd Price Qd Price od 16 16 14 0 14 16 14 12 1 2 3 16 14 126 2 Amount society Qd willing to pay 1=0+1+0) 42 (=12+16+14) 3=0 + 2 +1) 36 (=10+14+12) =1+3+2) 30 (8+12+10) 9 (=2+4+3) 24 (6+10+8) 12 (3+5+4) 18 (=4+8+6) 15 (4+6+5) 12 (2+6+4) 18 (=5+7+6) 6 (0+4+2) 21 (=6+8+7) 8(=0+8+0) 10 4 Aal Oo 6 6 6 2 82 8 2