Two individuals with identical utility functions on a private good X and a public good G...

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Two individuals with identical utility functions on a private good X and a public good G where G = G+G2 and G is the contribution of individual i. The utility function of each individual i is U(X, G) = 2ln(X;) + In(G). Each individual budget constraint is X; + G = 150. (a) (5 pts) Calculate the private provision of public good G. (b)(5 pts) Calculate the optimal provision of public good G. (c) (5 pts) Is the public good under-provided by the market? Explain why. Two individuals with identical utility functions on a private good X and a public good G where G = G+G2 and G is the contribution of individual i. The utility function of each individual i is U(X, G) = 2ln(X;) + In(G). Each individual budget constraint is X; + G = 150. (a) (5 pts) Calculate the private provision of public good G. (b)(5 pts) Calculate the optimal provision of public good G. (c) (5 pts) Is the public good under-provided by the market? Explain why.

Answer rating: 100% (QA)

a To find the private provision of public good G we first need to understand that each individuals c... View the full answer