Using the table below, which shows the demand for a public good in an economy consisting of

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Using the table below, which shows the demand for a public good in an economy consisting of two households, A and B, answer the following questions:

a. Graph the individual demand curves and the market demand curve.

b. What would make you doubt that the table is an accurate reporting of the individual demand curves?

c. If the marginal cost of providing one unit of the good is $2.00, what is the socially optimal amount of the public good?

d. Given the free rider problem, is your answer to c most likely an underestimate or an overestimate?

Related Book For answer-question

Managerial Accounting

ISBN: 978-1118338445

2nd edition

Authors: Charles E. Davis, Elizabeth Davis

Posted Date: May 25, 2018 01:10 AM

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Using the table below, which shows the demand for a public good in an economy consisting of

Question:

Price $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 Quantity A 12 demanded B 4 10 8 3 2 6 1 4 0 2 0 0 0 Price $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 Quantity A 12 demanded B 4 10 8 3 2 6 1 4 0 2 0 0 0

Expert Answer:

a The graph of the market demand curve is shown in the accompany... View the full answer

Managerial Accounting

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