Suppose that there are only three people that live in a (very) small town: Eric, Greg,...

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Economics

Suppose that there are only three people that live in a (very)small town: Eric, Greg, and Katie. The town is thinking of buildinga park which you can assume is a public good for these threeindividuals in the town. Based on the individualsâ€™ demand schedulesfor the park, which are given below, calculate and graph the socialmarginal benefit curve for the park.
Ericâ€™s Demand
Gregâ€™s Demand
Katieâ€™s Demand
Price per Acre
Number of Acres
Price per Acre
Number of Acres
Price per Acre
Number of Acres
$14
1
$11
1
$18
1
$13
2
$10
2
$17
2
$12
3
$9
3
$16
3
$11
4
$8
4
$15
4
$10
5
$7
5
$14
5
$9
6
$6
6
$13
6
$8
7
$5
7
$12
7
$7
8
$4
8
$11
8
b. Assume that the supply curve for the park is shown in thefollowing chart. Graph this supply curve on your graph from part b.What is the socially optimal size of the park (in acres)?
Supply Curve
Price per Acre
Number of Acres
$13
1
$17
2
$22
3
$27
4
$31
5
$35
6
$39
7
$44
8

Answer & Explanation Solved by verified expert

4.0 Ratings (608 Votes)

aAs park is a public good we have to make vertical summation todetermine that total quantity and price demanded Public goods arecharacterised by non rival and non exclusion Non rival means acomsumption of See Answer

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Ericâ€™s Demand		Gregâ€™s Demand		Katieâ€™s Demand
Price per Acre	Number of Acres		Price per Acre	Number of Acres	Price per Acre	Number of Acres
$14	1		$11	1	$18	1
$13	2		$10	2	$17	2
$12	3		$9	3	$16	3
$11	4		$8	4	$15	4
$10	5		$7	5	$14	5
$9	6		$6	6	$13	6
$8	7		$5	7	$12	7
$7	8		$4	8	$11	8

Supply Curve
Price per Acre	Number of Acres
$13	1
$17	2
$22	3
$27	4
$31	5
$35	6
$39	7
$44	8