Question

There are three consumers of a public good. Their marginal willingness-to-pay curves are given by:

CONSUMER 1: $MWP ^{1}(Q) = 60-Q$

CONSUMER 2:   $MWP ^{2}(Q) = 100-Q$

CONSUMER 3:   $MWP ^{3}(Q) = 140-Q$

where MWP is in dollars per unit and Q is the quantity of the public good. The marginal cost of the public good is $180.

a) What is the efficient level of production of the public good?

b) If the three consumers were to pay a third of the cost of producing the public good, what quantity of the public good would be produced? What would be the size of the deadweight loss?

c) Propose an alternative cost sharing arrangement that leads to the efficient quantity of the public good being produced.

**PLEASE ANSWER PART B AND C AS WELL !**

Answer 1

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ity Publh oo if 3 covsumeu oducio deve to me Public od r fom he iven data, if cost neduced to o6 3 ะ 180 Here oe chooke MSB end mc cunve a leve olh at ahich only tonJun 3 have α positive uitkngnos y) alteinathe gest shaing azyanjoment hat lesd torbe efficient quantity 15-public ayrangement hat eod roduce d 1-

fe he 9ood inot prowided at a, tke would be he avea under the msB cuve andmC 0.5 (300t80) C40) 2400 C deadueght toill measure the poteobrel net economic benefit, ) Ro