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Say that Laura (L), Maureen (M), and Carrie (C) are three individuals who are contemplating the purchase of some amount of good X. Units of X can be produced at a constant marginal cost of 24. The following equations show how the marginal benefit (M B) that each individual places on X varies with the quantity she consumes: L: MB(L) = 30 - X M: MB(M) = 24 - X C: (MB(C) = 20 - X (a) How much of this good should they purchase if X is a private good? (b) How much of this good should they purchase if X is a public good? (c) Construct a diagram to illustrate your ancwor to part b

Say that Laura (L), Maureen (M), and Carrie (C) are three individuals who are contemplating the purchase of some amount of good X. Units of X can be produced at a constant marginal cost of 24. The following equations show how the marginal benefit (M B) that each individual places on X varies with the quantity she consumes: L: MB(L) = 30 - X M: MB(M) = 24 - X C: (MB(C) = 20 - X (a) How much of this good should they purchase if X is a private good? (b) How much of this good should they purchase if X is a public good? (c) Construct a diagram to illustrate your ancwor to part b

Microeconomic Theory
Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter6: Demand Relationships Among Goods
Section: Chapter Questions
Problem 6.9P
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Say that Laura (L), Maureen (M), and Carrie (C) are three individuals who are contemplating the purchase of some amount of good X. Units of X can be produced at a constant marginal cost of 24. The following equations show how the marginal benefit (M B) that each individual places on X varies with the quantity she consumes: L: MB(L) = 30 - X M: MB(M) = 24 - X C: (MB(C) = 20 - X (a) How much of this good should they purchase if X is a private good? (b) How much of this good should they purchase if X is a public good? (c) Construct a diagram to illustrate your answer to part b.
Transcribed Image Text:Say that Laura (L), Maureen (M), and Carrie (C) are three individuals who are contemplating the purchase of some amount of good X. Units of X can be produced at a constant marginal cost of 24. The following equations show how the marginal benefit (M B) that each individual places on X varies with the quantity she consumes: L: MB(L) = 30 - X M: MB(M) = 24 - X C: (MB(C) = 20 - X (a) How much of this good should they purchase if X is a private good? (b) How much of this good should they purchase if X is a public good? (c) Construct a diagram to illustrate your answer to part b.
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