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There are two workers. Each worker's demand for a public good is P= 20 - Q. The marginal cost of providing the public good is $24. The accompanying graph summarizes the relevant information. Price 44 40 36 32 28 24 20 16 12 8 4 0 MC 2 4 6 8 10 12 14 16 18 20 22 Quantity a. What is the socially efficient quantity of the public good? units p. How much will each worker have to pay per unit to provide the socially efficient quantity? c. Suppose the two workers contribute the amount needed to provide the quantity of public good you identified in parts (a) and (b). A third worker values the public good just like the two contributing workers, but she claims not to value the good because she wants to 'free ride" on the payments of the other two workers. 1) Given the three workers' true demands for the public good, is the amount of the public good provided by the two workers socially efficient? O No O Yes

There are two workers. Each worker's demand for a public good is P= 20 - Q. The marginal cost of providing the public good is $24. The accompanying graph summarizes the relevant information. Price 44 40 36 32 28 24 20 16 12 8 4 0 MC 2 4 6 8 10 12 14 16 18 20 22 Quantity a. What is the socially efficient quantity of the public good? units p. How much will each worker have to pay per unit to provide the socially efficient quantity? c. Suppose the two workers contribute the amount needed to provide the quantity of public good you identified in parts (a) and (b). A third worker values the public good just like the two contributing workers, but she claims not to value the good because she wants to 'free ride" on the payments of the other two workers. 1) Given the three workers' true demands for the public good, is the amount of the public good provided by the two workers socially efficient? O No O Yes

Principles of Economics, 7th Edition (MindTap Course List)
Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter11: Public Goods And Common Resources
Section: Chapter Questions
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There are two workers. Each worker's demand for a public good is P= 20 - Q. The marginal cost of providing the public good is $24. The accompanying graph summarizes the relevant information. Price 44 40 36 32 28 24 20 16 12 8 4 0 GA MC 2 4 6 8 10 12 14 16 18 20 22 Quantity a. What is the socially efficient quantity of the public good? units b. How much will each worker have to pay per unit to provide the socially efficient quantity? c. Suppose the two workers contribute the amount needed to provide the quantity of public good you identified in parts (a) and (b). A third worker values the public good just like the two contributing workers, but she claims not to value the good because she wants to "free ride" on the payments of the other two workers. (1) Given the three workers' true demands for the public good, is the amount of the public good provided by the two workers socially efficient? No O Yes
Transcribed Image Text:There are two workers. Each worker's demand for a public good is P= 20 - Q. The marginal cost of providing the public good is $24. The accompanying graph summarizes the relevant information. Price 44 40 36 32 28 24 20 16 12 8 4 0 GA MC 2 4 6 8 10 12 14 16 18 20 22 Quantity a. What is the socially efficient quantity of the public good? units b. How much will each worker have to pay per unit to provide the socially efficient quantity? c. Suppose the two workers contribute the amount needed to provide the quantity of public good you identified in parts (a) and (b). A third worker values the public good just like the two contributing workers, but she claims not to value the good because she wants to "free ride" on the payments of the other two workers. (1) Given the three workers' true demands for the public good, is the amount of the public good provided by the two workers socially efficient? No O Yes
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