Consider the diagram below which depicts a two-household community consisting of hOusehold A and household B. The quantity of public good is measured along the horizontal axis and the share of tax paid by HHA and HHB measures the share of tax paid by HHẠ and HHB.

Consider the diagram below which depicts a two-household community consisting of hOusehold A and household B. The quantity of public good is measured along the horizontal axis and the share of tax paid by HHA and HHB measures the share of tax paid by HHẠ and HHB.

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Design Of The Tax System

Section: Chapter Questions

Problem 4CQQ

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Question

While the Lindahl model (equilibrium) can be analogous to the market for private goods, they have interesting differences. How do we interpret Q1 in the diagram? What about S?

Consider the diagram below which depicts a two-household community
consisting of household A and household B. The quantity of public good is
measured along the horizontal axis and the share of tax paid by HHA and
HHB measures the share of tax paid by HHA and HHB.
100%
O'
A's share
of taxes
B's share
of taxes
DA
100%

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