Question: A. There are three (3) consumers for a public good. The demand curves for the consumers are as follows: Consumer A: PA = 60 -

A. There are three (3) consumers for a public good. The demand curves for the consumers are as follows:

Consumer A: PA = 60 - Q

Consumer B: PB = 100 - Q

Consumer C: PC = 140 - Q

Where, measures the number of units of each good and price is measured in Pula (P) per unit. The marginal cost of the public good is P150.

(a) What is the economically efficient level of production of the good? [4 marks] (b) Illustrate your answer on a clearly drawn graph [4 marks] (c) Suppose that the good was not provided at all because of the free-rider problem. What is

the size of the deadweight loss arising from this market failure? [4 marks]

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