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Suppose that you have two people in an economy, Ms. Hundley and Mr. McKenna, who want to produce a public good S. Suppose we find out the Lindahl equilibrium using the method in your textbook. In this case, the demand curve for Ms. Hundley is S=P1/2. The demand curve for Mr. McKenna is S=8/P. If the marginal social cost of the project is 10, what is the Lindahl equilibrium quantity of S? What are the Lindahl prices?

Microeconomics, Economics

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