ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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6. Public Goods
Say we have a PPF x² + y² = 2. x is a private good and y is a public good. A representative
consumer i out of 100 people consumes x; = 100 and y; = y (because a public good is not
excludable) and has a utility function U (x, y) = x¡Y = 100
a. What is the competitive market outcome, roughly speaking?
b. What is the socially optimal x and y?
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Transcribed Image Text:6. Public Goods Say we have a PPF x² + y² = 2. x is a private good and y is a public good. A representative consumer i out of 100 people consumes x; = 100 and y; = y (because a public good is not excludable) and has a utility function U (x, y) = x¡Y = 100 a. What is the competitive market outcome, roughly speaking? b. What is the socially optimal x and y?
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