Question

Private Good. In previous assignments, the competitive solution at P=MC = $3 resulted in Q = 7 and TC = $21. Assume the population doubles to six people by adding the same three people as below. (hint: some values are filled in to assist in the calculation.

Price ($/loaf of bread per week)	7	6	5	4	3	2	1
#1	2	2	3	3	3	4	4
#2	0	0	0	1	1	1	2
#3	1	2	2	2	3	3	3
Market Demand Qd	6	8	10	12	14	16	18

Competitive Solution: P = MC =$3, Qc = _____, Pc = _____

Total Cost of Production = _____ Total Taxes from each resident = TC/6 = _____

Res. Total Valuation #1a = ___, #2a = ___, #3a = ___#1b = ___, #2b = ___, #3b = ____

Vote (Y or N): #1a = ___, #2a = ___, #3a = ___#1b = ___, #2b = ___, #3b = ____

Impact on Budget = Total Taxes – Total Cost = _____ - _____ = 0

Doubling the population resulted in (more than or less than) doubling of output and (more than or less than) doubling of total cost.

Answer 1

Answer)...........-------------------

In case of public goods, which are characterized by non-rivalry and non-excludability, there is a fixed quantity of output that can be supplied in the market so that each can consume the good. But different consumers places different willingness to pay for each unit of the public good. As we know, the willingness to pay for a good for a consumer is determined by its demand curve, so the vertical summation of all the curves determines the market's marginal benefit curve.

On the contrary, private goods have no such characteristic of non-rivalry and excludability. Also, private good can be purchased in any amount by any individual at any given price. The society in this case, unlike public good, does not have to arrive at a particular output. So the market demand curve is determined by the horizontal summation of all the individual demand curves..........