QUESTION 24 Consider the following provision of public good problem: Citizen 1 initial budget: w1 = 80,000 $ Citizen 2 initial budget: w2 = 60,000 S Cost of public good: C = 40,000 Citizen 1 Utility Function: U1(x1 g) = 3(x1) +90,000g Citizen 2 Utility Function: U2(x2, g) = 2(x2) + 60,000g Notation: xi is the budget that citizen i spends on goods other than the public good; g is a public good indicator variable which takes on the value 1 when the public good is provided and zero otherwise. Given this information, the level of utility of citizen 1 when 1 pays and 2 free-rides will be (type it using two decimal places and no thousand separator, e.g. 200000.00):

QUESTION 24 Consider the following provision of public good problem: Citizen 1 initial budget: w1 = 80,000 $ Citizen 2 initial budget: w2 = 60,000 S Cost of public good: C = 40,000 Citizen 1 Utility Function: U1(x1 g) = 3(x1) +90,000g Citizen 2 Utility Function: U2(x2, g) = 2(x2) + 60,000g Notation: xi is the budget that citizen i spends on goods other than the public good; g is a public good indicator variable which takes on the value 1 when the public good is provided and zero otherwise. Given this information, the level of utility of citizen 1 when 1 pays and 2 free-rides will be (type it using two decimal places and no thousand separator, e.g. 200000.00):

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.7P

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