(12 points) Public fountains are considered a public good (nonrival and nonexcludable). Suppose a town has...
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(12 points) Public fountains are considered a public good (nonrival and nonexcludable). Suppose a town has 1000 habitants, which with an identical marginal benefit curve (MB)= 12 - 0.01g, with q in cubic meters. The Marginal Cost of fountains is given by MC = 6000 + 2q. a. Find the volume of fountains provided by the market (qM), assuming there is no cooperation between habitants. b. What is Efficient provision of fountains in the town, q*? c. What is the deadweight loss at the market equilibrium? d. Explain in plain English why this good is "under provided" by the market (assuming no cooperation). (12 points) Public fountains are considered a public good (nonrival and nonexcludable). Suppose a town has 1000 habitants, which with an identical marginal benefit curve (MB)= 12 - 0.01g, with q in cubic meters. The Marginal Cost of fountains is given by MC = 6000 + 2q. a. Find the volume of fountains provided by the market (qM), assuming there is no cooperation between habitants. b. What is Efficient provision of fountains in the town, q*? c. What is the deadweight loss at the market equilibrium? d. Explain in plain English why this good is "under provided" by the market (assuming no cooperation).
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Investment Analysis and Portfolio Management
ISBN: 978-0538482387
10th Edition
Authors: Frank K. Reilly, Keith C. Brown
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