Question: Public good Question 1 (5 marks) A and B derive utilities from consumption of a private good x and a public good 6. A's utility

Public good

Question 1 (5 marks) A and B derive utilities from consumption of a private good x and a public good 6. A's utility function is u, (xA, G) = 1:5 + 2 In G and A has an income of $10 B's utility function is u3(x3, G) = x3 + 6 In G and B has an income of $10 The cost of providing 6 in dollars is C(G) = 46 The price of private good x is 51. i) Find the optimal level of public good 6 with brief explanation. (2 marks) ii) If A and B contribute to pay for the cost of 6, nd the Nash equilibrium level of G. (2 marks) iii) Discuss the equilibrium above. (1 marks)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

Answer the following.... econ 1. Consider the simultaneous move game below: Left Center Right Top -1,3 3,-1 5,0 Middle 3,-1 -1,3 5.0 Bottom 0.5 0,5 1000,4 (a) Show that Player 2s action of "right" is...

Please answer Question all parts fully and clearly thanks! = Question 1. (15 marks) In this question you will study market provision of a public good. Consider three (types) of household with...

oalll Question: Put together a portfolio of work documents you have drafted and written. If you are working you can use actual workplace documents, with identifying names redacted. Do not include any...

my questions Exercise 13.5 (Hard) Tammy lives for two periods. In the first period of life she works ` hours at a wage of w per hour. In the second period of life she is retired and supplies no...

Help me please. In the month of September, all of the walmart grocery stores in Virginia sold 429,382 eggs. In that same month, all of the walmart grocery stores in Texas sold 283,054 eggs. How many...

2 Scenario In the island nation of Autarka, electricity is primarily generated by burning fossil fuels, 3 significant contributor to climate change. The government has proposed introducing a 60% tax...

3 Research report A research report is a professional document in which a researcher details the purpose, method and findings of their project. The report is written for an audience of professional...

In the island nation of Autarka, electricity is primarily generated by burning fossil fuels, a significant contributor to climate change. The government has proposed introducing a 60% tax on retail...

An investor has $10,000 that she wants to invest in Microsoft Corporation. She can either go long in Microsoft's stock at a spot price of $25 per share or purchase option contracts for $4 per share...

Recently, management at Oak Tree Golf Course received a few complaints about the condition of the greens. Several players complained that the greens are too fast. Rather than react to the comments of...

jayla Navarro has a per anticipating life insurance policy that returns part of her premiums at the end of the year.What is another name for this palicy

During the development and startup stages of a venture's life cycle, important financial ratios and measures include cash burn rates and liquidity ratio true or false

2. How does self-interest help achieve societys economic goals? Why is there such a wide variety of desired goods and services in a market system? In what way are entrepreneurs and businesses at the...

1. Contrast how a market system and a command economy try to cope with economic scarcity. LO2.1

LO2.2 List the main characteristics of the market system.