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In: Economics

The following table shows how the private marginal benefit enjoyed by John, Mary, Loren, and all...

The following table shows how the private marginal benefit enjoyed by John, Mary, Loren, and all other consumers of outdoor rock concerts varies with the number made available by a city government per summer.

A. Derive the demand curve for rock concerts assuming an outdoor rock concert is a public good and graph the problem. Note: It is not necessary to derive demand using algebraic equations, this can be illustrated graphically.

Number of Concerts
Consumers 1 2 3 4
John 150 125 100 75
Mary 125 100 75 50
Loren 100 75 50 25
All Others 600 400 200 100

B. If marginal cost of producing rock concerts is $1,000 no matter how many are produced, what is the efficient number of concerts to have each summer? What would be the efficient number of concerts to produce if the marginal cost of production were $425 instead of $1,000?

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Rahul Sunny answered 4 months ago
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