In the following diagram, the long-run supply curve (SiR) for a pure public good is drawn along with Kate's demand (D) and Rita's demand (DR). 1. A pure public good is non-rival in consumption and non-excludable. Draw the social marginal benefit (SMBG) curve for this pure public good. 2. The efficient provision level of the pure public good is Q* = 3. Suppose that individual tax prices were assessed for Rita and Kate that would cause them to want the efficient provision level of the pure public good. Rita's tax price would be PR = _ , while Kate's tax price would be pK = 4. Suppose that technological and social change caused the pure public good to become a rival and excludable good. Draw the social marginal benefit curve for this pure private good (SMBo). 5. The perfectly competitive market equilibrium for this pure private good would have a price of
Added by Vanilla V.
Step 1
The social marginal benefit (SMBG) curve for a pure public good is the vertical sum of the individual demand curves. This is because the good is non-rival and non-excludable, meaning that one person's consumption does not reduce the amount available for others, Show more…
Show all steps
Your feedback will help us improve your experience
Breanna Ollech and 98 other Microeconomics educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Key Concepts
Recommended Videos
In a purely competitive market, the price of a good is naturally driven to the value where the quantity demanded by consumers matches the quantity made by producers, and the market is said to be in $ equilibrium $. These values are the coordinates of the point of intersection of the supply and demand curves. (a) Given the demand curve $ p = 50 - \frac{1}{20} x $ and the supply curve $ p = 20 + \frac{1}{10} x $ for a good, at what quantity and price is the market for the good in equilibrium? (b) Find the consumer surplus and the producer surplus when the market is in equilibrium. Illustrate by sketching the supply and demand curves and identifying the surpluses as areas.
Further Applications of Integration
Applications to Economics and Biology
The following table shows how the marginal benefit of a service varies for five consumers. Quantity 1 2 3 Serkan 150 125 100 Asuman 125 100 75 Bahar 100 75 50 Murat 200 150 125 Meric 600 400 200 Derive the demand curve for this service assuming that it is a public good. If the marginal cost of the good is 850, what is the efficient output of the public good? If the marginal cost of the good is 425, what is the efficient output of the public good? If the marginal cost of the good is 850, what is the efficient output assuming it is a private good?
Prashant B.
In a purely competitive market, the price of a good is naturally driven to the value where the quantity demanded by consumers matches the quantity made by producers, and the market is said to be in equilibrium. These values are the coordinates of the point of intersection of the supply and demand curves. \begin{equation} \begin{array}{l}{\text { (a) Given the demand curve } p=50-\frac{1}{20} x \text { and the supply }} \\ {\text { curve } p=20+\frac{1}{10} x \text { for a good, at what quantity and }} \\ {\text { price is the market for the good in equilibrium? }}\\{\text { (b) Find the consumer surplus and the producer surplus }} \\ {\text { when the market is in equilibrium. Illustrate by sketch- }} \\ {\text { ing the supply and demand curves and identifying the }} \\ {\text { surpluses as areas. }}\end{array} \end{equation}
Recommended Textbooks
Principles of Economics
Principles of Microeconomics for AP® Courses
Economics
Transcript
18,000,000+
Students on Numerade
Trusted by students at 8,000+ universities
Watch the video solution with this free unlock.
EMAIL
PASSWORD