3. Public Goods: There are two consumers of fireworks, which are a public good. Amanda's benefit from fireworks is given by MBA = 100 – Q, where Q is the quantity of fireworks. Simeon's benefit is given by MBs = 60 – Q. a. Calculate the total marginal benefit, MBT. b. Suppose that fireworks can be provided at a marginal cost of MC = 2Q. Find the optimal number of fireworks. c. What does Amanda's MB equal at the optimal number of fireworks? Simeon's MB? What does MBT equal at the optimal number of fireworks? d. Graph Amanda’s MB, Simeon's MB, total marginal benefit, and the marginal cost. Illustrate your answers to parts (b) and (c) in your graph.

3. Public Goods: There are two consumers of fireworks, which are a public good. Amanda's benefit from fireworks is given by MBA = 100 – Q, where Q is the quantity of fireworks. Simeon's benefit is given by MBs = 60 – Q. a. Calculate the total marginal benefit, MBT. b. Suppose that fireworks can be provided at a marginal cost of MC = 2Q. Find the optimal number of fireworks. c. What does Amanda's MB equal at the optimal number of fireworks? Simeon's MB? What does MBT equal at the optimal number of fireworks? d. Graph Amanda’s MB, Simeon's MB, total marginal benefit, and the marginal cost. Illustrate your answers to parts (b) and (c) in your graph.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter11: Public Goods And Common Resources

Section: Chapter Questions

Problem 5PA

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