Consider Three Consumers of a Public Good with the Following

question 78

Essay

Consider three consumers of a public good with the following marginal benefit of consumption:
Consumer 1: MB₁ = 5 - 2Q
Consumer 2: MB₂ = 4 - Q
Consumer 3: MB₃ = 3 - Q
a. If the marginal cost of producing the public good is MC = 8Q, what is the efficient quantity of it?
b. If the marginal cost of producing the public good is constant at $4, what is the efficient quantity of it?

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Definitions:

Biological Motive

An innate drive stemming from biological needs that motivates behavior, such as hunger, thirst, or the drive for sleep.

Homeostasis

is the process by which living organisms regulate their internal environment to maintain stable, optimal conditions despite external changes.

Drive-Reduction Theory

A theory of motivation suggesting that biological needs create internal states of tension or arousal—called drives—which organisms are motivated to reduce.

Biological Concept

Fundamental ideas or principles that relate to the biological sciences, encompassing a wide range of phenomena from genetic inheritance to evolution.