Answered: different if the product is a public…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Consider a market with three consumers A, B and C. A has the demand function

P = 20 – Q, B has the demand function P = 12 - 0.5Q and C has the demand

function P = 8 - 0.5Q. The marginal cost of producing a product is constant at $8.

(i) If the product is a private good, compute the market equilibrium quantity.

(ii) Will your answer be different if the product is a public good instead?

Compare your answer with (i).

Hi, may i request for a detailed explaination? Thank you in advanced

Definition Video Formula Definition Phenomenon in which market supply and demand balance each other. Market equilibrium is the economic state in which the market demand curve intersects the market supply curve, giving us the equilibrium price and equilibrium quantity for which a commodity can be sold and purchased in an economy. When market equilibrium is achieved, it suggests that all resources have been allocated efficiently and that there is just a distribution of income and resources in the economy. Video Formula

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