Use the table below, which shows the demand for a public good in an economy consisting of two households, A and B, to answer the questions below. Price ($) $4 $6 $8 $10 $12 $14 $16 Quantity demanded A 12 10 8 6 4 2 O Quantity demanded B 4 3 2 1 O O O a. What would make you doubt that the table is an accurate reporting of the individual demand curves? There is no good reason why household A would demand so much more of a public good than household B. This suggests that household A is a free rider. Since people do not directly pay for public goods, they will tend to understate the value they receive from those goods. When individuals determine how much of a public good to demand, they estimate their marginal private benefit rather than the marginal social benefit. This causes them to understate the value that is received from a public good. O Since people do not directly pay for public goods, they will tend to overstate the value they receive from those goods. b. If the marginal cost of providing 1 unit of the public good is $16.00, the socially optimal amount of the public good is unit(s). c. Given the free rider problem, your answer to part b. is most likely an |overestimate