microeconomics The demand functions of individual A and B for a public good (G) is given by:PA = 500-2G&PB = 200 -0.8Gwhere, P = price offered by each individual (RM) and G = units of public goods. Suppose themarginal cost (MC) to produce G is constant, RM250.a. Derive the aggregate demand equation for the above public good. b. Sketch all the information provided above in the diagram below. [Note: Show all the demandand marginal cost functions in detail]Harga / Price800600400200O100200300Kuantiti / QuantityG* =c. Calculate the total quantity of public goods produced assuming no free riders are present(G*). Show this result in the above diagram.unit(s)

Public good has two features : Non Rival and Non-excludable. the consumption of public good by one…

The demand functions of individual A and B for a public good (G) is given by: PA = 500-2G & PB = 200- 0.8G where, P = price offered by each individual (RM) and G = units of public goods. Suppose the marginal cost (MC) to produce G is constant, RM250. 1. Derive the aggregate demand equation for the above public good.

The demand functions of individual A and B for a public good (G) is given by: PA = 500-2G & PB = 200- 0.8G where, P = price offered by each individual (RM) and G = units of public goods. Suppose the marginal cost (MC) to produce G is constant, RM250. 1. Derive the aggregate demand equation for the above public good.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.7P

See similar textbooks

Similar questions

Consider a non-rival and non-excludeable public good. The government decides whether or not to provide the good based upon a majority vote. If the good is provided all citizens pay an equal share of the cost. Evaluate the following two statements. (i) The good WILL NOT be provided if it is NOT efficient to do so. (ii) The good will be provided if it is efficient to do so. a. Both (i) and (ii) are always true. b. Neither (i) nor (ii) is always true. c. Only (ii) is always true. d. Only (i) is always true.
Suppose the marginal cost of a pure public good increases as more is purchased by a community. Prove that the Lindahl equilibrium will result in a budget surplus at the efficient annual output of the pure public good
Consider agent A with (inverse) demand curve for the public good PA = 60 − 2QA and agent B with inverse demand PB = 90 − 5QB, where prices are measured in £ per unit. The marginal cost of producing the public good is £10 per unit. What is the Pareto efficient level of the public good? Explain. Illustrate in a graph. [Hint: Compute the marginal social benefit of the public good by adding up the demand curves vertically, over the p’s]
Consider agent A with (inverse) demand curve for the public good Pa = 60 - 2Qa and agent B with inverse demand Pb = 90 - 5Qb , where prices are measured in £ per unit. The marginal cost of producing the public good is £10 per unit. What is the Pareto efficient level of the public good? Explain. Illustrate in a graph.
Give only typing answer with explanation and conclusion to all parts In the lectures, we dealt in detail with Ronald Coase's theorem developed in his article "The Public Price Problem". The next few questions are related to her. Answer whether the following statements are true or false by circling the appropriate word under each statement: According to Coase's theorem, static and dynamic efficiency are guaranteed in a society with sufficiently low transaction costs. True False According to Coase's theorem, with sufficiently high transaction costs, even static efficiency is not guaranteed. True False According to Coase's analyses, transaction costs matter because their size affects the scale of the market and hence (according to Smith) wealth. True False According to Coase's analyses, transaction costs matter because they influence firms' decisions about what final product to produce. True False
There are many possible ways to limit the number of cabs in a city. The most common method is an explicit quota using a medallion that is kept forever and can be resold. One alternative is to charge a high license fee each year, which is equivalent to the city’s issuing a medallion or license that lasts only a year. A third option is to charge a daily tax on taxicabs. Using figures, compare and contrast the equilibrium under each of these approaches. Discuss who wins and who loses from each plan, considering consumers, drivers, the city, and (if relevant) medallion owners.
Consider a two-good economy with one private and one public good. There are four consumers in this economy who contribute to public good provision. The price of the private good is $1 and the demand function of the public good for each consumer is as follows: p1 = 20 - 2G, p2 = 30-(5/10)G, p3 = 100-(G/2) and p4 = 60-G where G is the number of units of the public good and p^i is the price of each unit for consumer i in dollars. The cost of providing one extra unit of the public good is (alpha). (a) With 170 < alpha < 210, what is the optimal level of provision of the public good? Show the optimal point on a graph. (b) Is there a possibility that the public good is not supplied at all? Why? (c) If the public good is not supplied at all, what is the size of the deadweight loss due to this market failure? (d) If at least one person contributes, for what values of the public good will be supplied?
Consider agent A with (inverse) demand curve for the public good and agent B with inverse demand , where prices are measured in £ per unit. The marginal cost of producing the public good is £10 per unit. What is the Pareto efficient level of the public good? Explain. Illustrate in a graph. [Hint: Compute the marginal social benefit of the public good by adding up the demand curves vertically, over the p’s - image attached that has the inverse demand function
The government is considering setting up a public health program to cull birds to prevent the spread of bird flu in two regions. The marginal benefit for this program in region A is QA = 90 − 3P and in region B is QB = 250 − 5P. What is the marginal social benefit curve for this program across both regions?
b) Consider agent A with (inverse) demand curve for the public good and agent B with inverse demand , where prices are measured in £ per unit. The marginal cost of producing the public good is £10 per unit. What is the Pareto efficient level of the public good? Explain. Illustrate in a graph. [Hint: Compute the marginal social benefit of the public good by adding up the demand curves vertically, over the p’s]
True-False-Uncertain. Respond to following statements as True, False, Uncertain and justify your claim. According to the Coase Theorem, government intervention is needed to solve externalities. It always makes sense when a public good is financed by the government. If A is Pareto efficient and B is Pareto inefficient, A must be a Pareto improvement over B. According to Arrow’s impossibility theorem, a democratic society will always make consistent decisions.
Q.2 When transactions costs are sufficiently high, it may be more efficient to supply the good publicly than to have the good supplied by private markets”. Do you agree with the statement? Graphically explain your point of view. Kindly give answer in detail but relevant answer. Here subject is Public Sector Economics.