a. Use the data below to derive the demand schedule for a public good.Instructions: Enter your answers as whole numbers.DemandIndividual #1Individual #2Individual #3Public GoodPriceQdPriceQdPriceQdPriceQd$8$81$801772027661351524542443533363464227257118851b. Using the following supply schedule, determine the optimal quantity of this public good.QuantitySuppliedPrice$19101681364107241coLCLCcCLOLC

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Asked Sep 23, 2019
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a. Use the data below to derive the demand schedule for a public good.
Instructions: Enter your answers as whole numbers.
Demand
Individual #1
Individual #2
Individual #3
Public Good
Price
Qd
Price
Qd
Price
Qd
Price
Qd
$8
$8
1
$8
0
1
7
7
2
0
2
7
6
6
1
3
5
1
5
2
4
5
4
2
4
4
3
5
3
3
3
6
3
4
6
4
2
2
7
2
5
7
1
1
8
8
5
1
b. Using the following supply schedule, determine the optimal quantity of this public good.
Quantity
Supplied
Price
$19
10
16
8
13
6
4
10
7
2
4
1
co
LC
LC
cC
LO
LC
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a. Use the data below to derive the demand schedule for a public good. Instructions: Enter your answers as whole numbers. Demand Individual #1 Individual #2 Individual #3 Public Good Price Qd Price Qd Price Qd Price Qd $8 $8 1 $8 0 1 7 7 2 0 2 7 6 6 1 3 5 1 5 2 4 5 4 2 4 4 3 5 3 3 3 6 3 4 6 4 2 2 7 2 5 7 1 1 8 8 5 1 b. Using the following supply schedule, determine the optimal quantity of this public good. Quantity Supplied Price $19 10 16 8 13 6 4 10 7 2 4 1 co LC LC cC LO LC

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Expert Answer

Step 1

To find the demand schedule for public goods we need to do a vertical summation of demand curves. As the buyers of public goods mostly do not reveal their preferences in the market. The ‘willingness to pay determines the collective demand curve for the public. With the help of the following table, Demand schedule of public goods can be found out.

Individual 2
Individual 1
Individual 3
Price
Price
Price
1
8
0
8
8
0
7
C
7
2
7
0
0
6
3
1
1
5
5
4
5
2
4
2
4
4
3
3
3
3
6
3
4
2
4
2
7
2
1
5
1
1
ce.
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Individual 2 Individual 1 Individual 3 Price Price Price 1 8 0 8 8 0 7 C 7 2 7 0 0 6 3 1 1 5 5 4 5 2 4 2 4 4 3 3 3 3 6 3 4 2 4 2 7 2 1 5 1 1 ce.

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Step 2

Therefore, Price for Public goods are calculated by: Price of individual 1 where it has Qd=1 + Price of individual 2 ...

Price (S
1
5+8+6=19
4+7+5 16
2
3+6+4 13
3
2+5+3 10
4
1+4+2=7
5
3+1 4
6
7
1
8
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Price (S 1 5+8+6=19 4+7+5 16 2 3+6+4 13 3 2+5+3 10 4 1+4+2=7 5 3+1 4 6 7 1 8

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Consumer demand theory

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