(Answered) Public goods provision consider three consumers indexed by

Management Studies

Public Goods Provision. Consider three consumers indexed by i ∈{1,2,3) with the following demand functions for a public good G.

p1=20-1/10G, p2=20-1/10G, p3=30-2/10G

Where p1 is the price consumer i is willing to pay for a quantity of G

a. If marginal cost is 70, what is the optimum level of public good?

b. If marginal cost is 20, what is the equilibrium level of public good provided by the market?(you need to vertically sum the demand curves here)

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