Question

I. (10 points) Individuals A, B and C have the following individual demand curves: QA- 10-P O-18-3P Oc -12-5P Make a price quantity chart for each consumer. Then add a column showing the total quantity demanded for a private good. Next show the quantity price chart showing the total demand for a public good. Graph all 4 demand curves on the same graph (see provided graph sheet). If the marginal cost is $4 a unit how many units should be bought if the good is a private good? How many units would each individual buy? If the marginal cost is S6 a unit, to the nearest.1 how many units should be bought if the good is a publie good? To the nearest .1 how much would each person be willing to pay? Do consumers of public goods have the same incentives to reveal their true valuations of Public goods as they do of Private goods? Why or why not?

Answer 1

Ans...
A price quanity chart for each customer is given below- 10 12 4 0 10 12 10 18 Total Q(private good) 0+(-12)+7--5 2+(-6)+8-0 6+6+10-22 10+18+12-40 Now The total demand of the public good is calculated summing vertically 4 4 12 18 24 10 Total P (public good) 1+3+6-10 4+4+12-20 7+5+18-30 10+6+24-40

All the demand curves are graphed as below- Il 45 40 35 30 Total Demand ublic good) 25 15 10 Total demand (private good 10 15 20 25 30 35 40 45