National Public Radio (NPR) is a public good. The cost (supply) of each "unit" of NPR is P=2. Derek's valuation for each unit of NPR (demand) is given by PD=10–Q, and Kim's valuation is given by PK=4–0.25Q. The total social valuation (demand) of NPR is PS=Answer-AnswerQ. The socially optimal amount of NPR is Answer units. Without intervention, the private market would lead to an Answer of NPR.
National Public Radio (NPR) is a public good. The cost (supply) of each "unit" of NPR is P=2. Derek's valuation for each unit of NPR (demand) is given by PD=10–Q, and Kim's valuation is given by PK=4–0.25Q. The total social valuation (demand) of NPR is PS=Answer-AnswerQ. The socially optimal amount of NPR is Answer units. Without intervention, the private market would lead to an Answer of NPR.
Chapter16: Public Goods And Public Choice
Section: Chapter Questions
Problem 1.1P: (Optimal Provision of Public Goods) Using at least two individual consumers, show how the market...
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National Public Radio (NPR) is a public good. The cost (supply) of each "unit" of NPR is P=2. Derek's valuation for each unit of NPR (demand) is given by PD=10–Q, and Kim's valuation is given by PK=4–0.25Q.
The total social valuation (demand) of NPR is PS=Answer-AnswerQ.
The socially optimal amount of NPR is Answer units.
Without intervention, the private market would lead to an Answer of NPR.
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