The Following Table Shows the Quantity Demanded of a Public

question 177

Essay

The following table shows the quantity demanded of a public good at different price levels by John and Elizabeth. $$\begin{array} { r } { \text { Quantity Demanded } } \\\begin{array} { l c c } \text { Price } & \text { John } & \text { Elizabeth } \\0 & 100 & 100 \\0.5 & 90 & 80 \\1 & 80 & 60 \\1.5 & 70 & 40 \\2 & 60 & 20 \\2.5 & 50 & 0 \\3 & 40 & 0 \\3.5 & 30 & 0 \\4 & 20 & 0 \\4.5 & 10 & 0 \\5 & 0 & 0\end{array}\end{array}$$ 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:

Exchange Rates

The value of one currency for the purpose of conversion to another, influencing international trade and investment.

Market for Euros

A foreign exchange market where Euros are traded against other currencies.

U.S. Dollar

The official currency of the United States, widely used as a benchmark in international trade and considered a key global reserve currency.

Flexible Exchange-Rate System

A currency valuation system where the value of a currency is allowed to fluctuate in response to foreign exchange market mechanisms.