Consider a simple public good economy with three people and two goods: one public (x) and...

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Consider a simple public good economy with three people and two goods: one public (x) and one private (y). Assume that one unit of the public good can be produced with one unit of the private good. Person 1's utility function is u1(x,y1) = logx + y1, Person 2's utility function is u2(x,y2) = 2logx + y2, and Person 3's utility function is u3(x,y3) = 3logx + y3. Find the optimal output of the public good by using Samuelson's condition. Find the tax shares by using the Wicksell-Lindahl mechanism. Comment on the efficiency and incentives properties of the Wicksell-Lindahl mechanism. Consider a simple public good economy with three people and two goods: one public (x) and one private (y). Assume that one unit of the public good can be produced with one unit of the private good. Person 1's utility function is u1(x,y1) = logx + y1, Person 2's utility function is u2(x,y2) = 2logx + y2, and Person 3's utility function is u3(x,y3) = 3logx + y3. Find the optimal output of the public good by using Samuelson's condition. Find the tax shares by using the Wicksell-Lindahl mechanism. Comment on the efficiency and incentives properties of the Wicksell-Lindahl mechanism.

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Explanation The WicksellLindahl mechanism is an efficient way to ... View the full answer