Answered: PM= PA+PB = Set gaga because of open…

PM= PA+PB = Set gaga because of open access and indivisibility (i..e., no rival in consumption) which are the characteristics of public goods.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter11: Public Goods And Common Resources

Section: Chapter Questions

Problem 3PA

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Question

100%

Po
=-16-12- E
描く
AL
वा
PA=80-0.6qA
PB=50-0.5qB
MC $40
AaBbCcDdfe
Normal
AaBbCcDdEe
No Spacing
The community has two individuals: Mr. A and Ms. B and the good is a public
good, say a highway. Mr. A has a stronger demand (PA) for the highway than
Ms. B (PB).
The following are their individual inverse demands and MC:
Aa BbCcDc AaBb CcDdE A
Heading 1
Heading 2
a. Derive the inverse market demand (PM) by adding up vertically the two
individual inverse demands PA and PB. Label the cutoff point for the market
demand.
PM PA+PB =
Set gaga because of open access and indivisibility (i..e., no rival in
consumption) which are the characteristics of public goods.
MacBook Air
b. Graph the two individual demands and the market demand. Drawn on the board
in the classroom and determine the kink point for the market demand.
The vertical and horizontal intercepts of Mr. A's demand curve are
The vertical and horizontal intercepts for Ms. B's demand curve are
The vertical intercepts for the market demand PM is
The kink point is P= ??? when the weaker horizontal intercept q = 100 is plugged
into the inverse market demand PM equation.
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