Pay per unit to provide the socially efficient quantity

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Reference no: EM1315058

Q. 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 complementary graph abridges the relevant information.

a Illustrate what is the socially efficient quantity of the public goods?

b Elucidate how much will each worker have to pay per unit to provide the socially efficient quantity?

c Assume the two workers contribute the amount wanted to provide the quantity of public good you identified in part (a) also (b). A third worker values the public good immediately like the two contributing workers, but she claims not to value the good because she wants to "free ride" on the payment of the other two workers

1 Given the three workers' true demands for the public good, is the amount of public good provided by the two workers socially efficient?

2 Compare the level of consumer surplus enjoyed by these three workers. Which worker(s) enjoys the most surplus?

Reference no: EM1315058

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