A quiet town in Kansas has 2,000 people, all of whom have thesame preferences. Thereis one public good and one private goodwhich is money spent on private consumption.

Each person (i) in town has utility U(x_i,y) =x₁ + y^(1/2) wherex_i is money spent on private consumption byperson i and y is the amount of public goodthat the town provides. If the public good costs $10 per unit, thenthe Pareto efficient amount of publicgood for the town to provideis:

Correct answer is 10,000 units, show steps

Answer rating: 100% (QA)

To determine the Pareto efficient amount of public good for the town to provide we need to find the ... View the full answer