Please help to solve this. 6. Public GoodsSay we have a PPF x² + y² = 2. x is a private good and y is a public good. A representativeconsumer i out of 100 people consumes x; = 100 and y; = y (because a public good is notexcludable) and has a utility function U (x, y) = x¡Y = 100a. What is the competitive market outcome, roughly speaking?b. What is the socially optimal x and y?

PPF : x2 + y2 = 2Utility function : U= xi y = xy /100Where , x = Private Good , y = Public Good

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 x₂ = 100 and y₁ = y (because a public good is not excludable) and has a utility function U(x, y) = x₂y = 100 a. What is the competitive market outcome, roughly speaking? b. What is the socially optimal x and y?

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 x₂ = 100 and y₁ = y (because a public good is not excludable) and has a utility function U(x, y) = x₂y = 100 a. What is the competitive market outcome, roughly speaking? b. What is the socially optimal x and y?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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