Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
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Question
Chapter 9, Problem 12Q
To determine
The reason behind the vertical summation of individual demand
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Suppose there are two residents in a neighborhood, and you know both of their demand curves for a public good. What would you have to do in order to figure out what the social demand curve?
a-Subtract the demand of the person with the higher valuation of the public good from the demand of the person with the lower valuation of the public good
b-Add their demand curves together
c-Multiply the two demand curves together
d-Subtract the demand of the person with the lower valuation of the public good from the demand of the person with the higher valuation of the public good
Use your demand schedule for a public good, determined in question 1, and the following supply schedule to ascertain the optimal quantity of this public good. Why is this the optimal quantity?
Define public goods
Chapter 9 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
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- Suppose there are two residents in a neighborhood, and you know both of their demand curves for a public good. What would you have to do in order to figure out what the social demand curve? A.Multiply the two demand curves together B.Add their demand curves together C.Subtract the demand of the person with the lower valuation of the public good from the demand of the person with the higher valuation of the public good D.Subtract the demand of the person with the higher valuation of the public good from the demand of the person with the lower valuation of the public goodarrow_forwardi)A public good a )costs essentially nothing to produce and is thus provided by the government at a zero price. b)can never be provided by a nongovernmental organization. c) can't be provided to one person without making it available to others as well. d)generally results in substantial negative externalities. ii)The market demand curve for a public good a) shows the total value that all individuals place on each additional unit of the good. b) is derived in the same manner as demand curves for private goods. c)is derived by horizontally summing all individual demand curves. d)shows the total number of units that would be produced by the public sector at each possible price. iii)The market demand curve for a public good a) shows the total value that all individuals place on each additional unit of the good. b)is derived in the same manner as demand curves for private goods. c) is derived by horizontally summing all individual demand curves. d)shows the total number of units…arrow_forwardIn what sense does the demand curve for a pure public good differ from that of a pure private good ?arrow_forward
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