What is the economically efficient level of production

Reference no: EM13183438

There are three consumers of a public good. The demands for the consumers are as follows:

Consumer 1: $Q = 60 - 2P_{1}$

Consumer 2: $Q = 100 - P_{2}$

Consumer 3: $Q = 140 - P_{3}$

Where Q measures the number of units of the public good and P is the price in dollars. The marginal cost of providing the public good is $180.

a) What is the economically efficient level of production (Q*) of the good?

b) Illustrate your answer on a clearly labeled graph and calculate the net benefits from public good provision of Q*

Reference no: EM13183438

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