The Following Table Shows the Quantity Demanded of a Public

question 12

Essay

The following table shows the quantity demanded of a public good at different price levels by John and Elizabeth. $$\begin{array} { l c c } \text { Price } & \ { \text { Quantity Demanded } } \\& \text { John } & \text { Elizabeth } \\0 & 100 & 100 \\0.5 & 90 & 80 \\1 & 80 & 60 \\1.5 & 70 & 40 \\2 & 60 & 20 \\2.5 & 50 & 0 \\3 & 40 & 0 \\3.5 & 30 & 0 \\4 & 20 & 0 \\4.5 & 10 & 0 \\5 & 0 & 0\end{array}$$ Answer the following questions:
(1) Draw the demand curve for both John and Elizabeth.
(2) Draw the market demand for this public good.
(3) If the marginal cost of providing one unit of the good is $3 per unit, what is the socially optimal amount of the public good (show this on the same graph)?
(4) In this case, how much will each individual be willing to pay?

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Definitions:

Operating Cost

Expenses associated with the day-to-day operations of a business, including rent, utilities, and payroll.

Injection Mold

A manufacturing process for creating parts by injecting material into a mold to form shapes and designs.

Competitor's Product

A product or service that is offered by one or more companies operating in the same market as another company, serving as alternatives or substitutes.

Operating Cost

The expenses associated with running a business's core operations on a day-to-day basis.