Question

Public Good. In previous assignments TV-MC-$8 resulted in = 5 and TC = $40 Assume the population doubles to six people by adding the same three people as below. (hint: some values are filled in to assist in the calculation # of videos per week 4 Value to Cust. #1 Customer #2 Customer #3 TotalValue of good 4 4 4 0 0 0 4 2422 4 -- 16 12_ Competitive Solution, TV-MC8 Qc- Total Cost of Production- Valuation per Res. #1a Vote (Y or N) Impact on Budget- Total Taxes - Total Cost- Total Taxes from each resident-TC/6 = Doubling the population resulted in (more than or less than) doubling of output and (more than or less than) doubling of total cost.

Answer 1

PUBLIC GOODS:

The public goods, which are characterized by non-rivalry and non-excludability, there is a fixed quantity of output that can be supplied in the market so that each can consume the good.

The different consumers are came form the different places to willingness to pay for each unit of the public good.

Already we know, the willingness to pay for a good for a consumer is determined by its demand curve.

So the vertical summation of all the curves determines the market's marginal benefit curve.

On the contrary, private goods have no such characteristic of non-rivalry and excludability.

Also, private good can be purchased in any amount by any individual at any given price.

The society in this case, unlike public good, does not have to arrive at a particular output.

So the market demand curve is determined by the horizontal summation of all the individual demand curves.