optimal quantity of public goods that the government should provide, and interpret your results. Make sure you show all of the relevant cases. What happens when b changes, or when q changes? (b) Repeat part (a), except with perfect complements preferences; that is, for the case where the representative consumer always wishes to consume private consumption goods and public goods in fixed proportions, or C = aG, with a > 0.
Consider the model of public goods in the last section of this chapter.
(a) Suppose that preferences over private consumption C and public goods G are such that these two goods are perfect substitutes; that is, the marginal rate of substitution of public goods for private goods is a constant b > 0 . Determine the optimal quantity of public goods that the government should provide, and interpret your results. Make sure you show all of the relevant cases. What happens when b changes, or when q changes?
(b) Repeat part (a), except with perfect complements preferences; that is, for the case where the representative consumer always wishes to consume private consumption goods and public goods in fixed proportions, or C = aG, with a > 0.
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