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Suppose that a small town uses a referendum to overcome free ridership problem & determine how its residents might value a new water filtration system for its public water supply. The voting results are aggregated by the town's two districts, yielding the following demand estimates:

District 1: Q=160-20P1
District 2: Q=60-5P2

Where Q is the expected percent of copper to be filtered by the system and P is the price in millions of dollars.
a. Based on the estimates, determine the town's market demand for this public good, the new filtration system.
b. If the market supply for the system were P=6+ 0.15Q, what would be the equilibrium price and quantity for the town?

 

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M9294476

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