-The diagram above shows the individual demand curves for individual A (D_A) and individual B (D_B) for a garden,with various areas.The marginal cost of the garden is $8 per square metre.If the garden is a private good,the equilibrium quantity is approximately ______ square metres.

Question

-The diagram above shows the individual demand curves for individual A (D<sub>A</sub>) and individual B (D<sub>B</sub>) for a garden,with various areas.The marginal cost of the garden is $8 per square metre.If the garden is a private good,the equilibrium quantity is approximately ______ square metres. A) 18 B) 24 C) 37.3 D) 40 E) 42

Quizplus · Accepted Answer

The equilibrium quantity is where the marginal cost equals the sum of the marginal benefits. The marginal benefit for individual A is the height of the demand curve at each quantity, and the marginal benefit for individual B is the height of the demand curve at each quantity. The sum of the marginal benefits is the height of the vertical sum of the demand curves at each quantity. The equilibrium quantity is where the marginal cost equals the height of the vertical sum of the demand curves. This occurs at approximately 37.3 square meters.

-The Diagram Above Shows the Individual Demand Curves for Individual