The following table shows the quantity demanded of a public good at different price levels by John and Elizabeth. $$\begin{array} { l c c }
\text { Price } & \ { \text { Quantity Demanded } } \
& \text { John } & \text { Elizabeth } \
0 & 100 & 100 \
0.5 & 90 & 80 \
1 & 80 & 60 \
1.5 & 70 & 40 \
2 & 60 & 20 \
2.5 & 50 & 0 \
3 & 40 & 0 \
3.5 & 30 & 0 \
4 & 20 & 0 \
4.5 & 10 & 0 \
5 & 0 & 0
\end{array}$$ Answer the following questions:
(1) Draw the demand curve for both John and Elizabeth.
(2) Draw the market demand for this public good.
(3) If the marginal cost of providing one unit of the good is $3 per unit, what is the socially optimal amount of the public good (show this on the same graph)?
(4) In this case, how much will each individual be willing to pay?

Question

The following table shows the quantity demanded of a public good at different price levels by John and Elizabeth. $$\begin{array} { l c c } 
\text { Price } & \ { \text { Quantity Demanded } } \
& \text { John } & \text { Elizabeth } \
0 & 100 & 100 \
0.5 & 90 & 80 \
1 & 80 & 60 \
1.5 & 70 & 40 \
2 & 60 & 20 \
2.5 & 50 & 0 \
3 & 40 & 0 \
3.5 & 30 & 0 \
4 & 20 & 0 \
4.5 & 10 & 0 \
5 & 0 & 0
\end{array}$$ Answer the following questions:
(1) Draw the demand curve for both John and Elizabeth.
(2) Draw the market demand for this public good.
(3) If the marginal cost of providing one unit of the good is $3 per unit, what is the socially optimal amount of the public good (show this on the same graph)?
(4) In this case, how much will each individual be willing to pay?

Quizplus · Accepted Answer

The Answer of The following table shows the quantity demanded of a public good at different price levels by John and Elizabeth. $$\begin{array} { l c c } 
\text { Price } & \ { \text { Quantity Demanded } } \
& \text { John } & \text { Elizabeth } \
0 & 100 & 100 \
0.5 & 90 & 80 \
1 & 80 & 60 \
1.5 & 70 & 40 \
2 & 60 & 20 \
2.5 & 50 & 0 \
3 & 40 & 0 \
3.5 & 30 & 0 \
4 & 20 & 0 \
4.5 & 10 & 0 \
5 & 0 & 0
\end{array}$$ Answer the following questions:
(1) Draw the demand curve for both John and Elizabeth.
(2) Draw the market demand for this public good.
(3) If the marginal cost of providing one unit of the good is $3 per unit, what is the socially optimal amount of the public good (show this on the same graph)?
(4) In this case, how much will each individual be willing to pay?

The Following Table Shows the Quantity Demanded of a Public