Suppose that there are only three people that live in a (very)
small town: Eric, Greg,...
80.2K
Verified Solution
Link Copied!
Question
Economics
Suppose that there are only three people that live in a (very)small town: Eric, Greg, and Katie. The town is thinking of buildinga park which you can assume is a public good for these threeindividuals in the town. Based on the individuals’ demand schedulesfor the park, which are given below, calculate and graph the socialmarginal benefit curve for the park.
Eric’s Demand
Greg’s Demand
Katie’s Demand
Price per Acre
Number of Acres
Price per Acre
Number of Acres
Price per Acre
Number of Acres
$14
1
$11
1
$18
1
$13
2
$10
2
$17
2
$12
3
$9
3
$16
3
$11
4
$8
4
$15
4
$10
5
$7
5
$14
5
$9
6
$6
6
$13
6
$8
7
$5
7
$12
7
$7
8
$4
8
$11
8
b. Assume that the supply curve for the park is shown in thefollowing chart. Graph this supply curve on your graph from part b.What is the socially optimal size of the park (in acres)?
Supply Curve
Price per Acre
Number of Acres
$13
1
$17
2
$22
3
$27
4
$31
5
$35
6
$39
7
$44
8
Answer & Explanation
Solved by verified expert
4.0 Ratings (608 Votes)
aAs park is a public good we have to make vertical summation todetermine that total quantity and price demanded Public goods arecharacterised by non rival and non exclusion Non rival means acomsumption of
See Answer
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
