3: The individual demand function of the consumer is MWTP = 12-1/2Q where Q is the...
3: The individual demand function of the consumer is MWTP = 12-1/2Q where Q is the quantity of a private good. How many units of the good does the consumer buy if the price is 6? Please show the result and the way you derived it.
4: What is the total willingness to pay for the number of units that correspond to a price of 6 (the number of units from question 3)? Show the results and the way you derived it.
5: For two consumers with MWTP = 12-1/2Q for a public good Q, what is the aggregate marginal willingness to pay at Q=0? Please show the result and the way you derived it.
Homework Answers
3) MWTP = 12 - 0.5Q
If P = 6,
6 = 12 - 0.5Q
Q = 12
4) P = 12 - 0.5 * 12
P = 6
5) If there are 2 consumer, each willing to pay $6,
Aggregate marginal willingness to pay at Q = 0,
MWTP = 12 - 0.5 * 0 = 12 (addition of both consumer willingness to pay)
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3: The individual demand function of the
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17.22. There are three consumers of a public good. The demands for the consumers are as follows: Consumer l: Pi = 60-Q Consumer 2: P.-100-Q Consumer 3: P 140-Q where Q measures the number of units of...
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3. Imagine there exist three consumers, each with their own demand curves for a Public Good. The equations below provide the demand curves for each consumer for this public good where P is the unit price of the public good and Q is the unit value of the public good. Consumer 1: P = 200 – Q Consumer 2: P= 40 – 30 Consumer 3: P = 50 - Q. The total cost (TC) producing the public good is given...
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