128

/in /by

1) Considerthe demand for a public good estimated for two sets of consumers:

(1) P1 = -0.5Q +10

(2) P2 = -0.25Q + 5

where Pis the price that each consumer is willing to pay at difference levels ofquantity. The cost of providing one additional unit of this public good is $4(e.g., marginal cost (MC) = $4)