Explore BrainMass
Share

# economically efficient level of production of the good

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

There are three consumers of a public good. The demands for the consumers are as follows:
Consumer 1: P1 = 60 â?" Q
Consumer 2: P2 = 100â?" Q
Consumer 3: P3 = 140 â?" Q
where Q measures the number of units of the good and P is the price in dollars. The marginal cost of the public good is \$180.
a) What is the economically efficient level of production of the good? Illustrate your answer on a clearly labelled graph.
b) How would your answer change if the marginal cost of the public good is \$60?

https://brainmass.com/economics/price-levels/economically-efficient-level-of-production-of-the-good-344764

#### Solution Preview

See the attached file. Thanks

There are three consumers of a public good. The demands for the consumers are as follows:
Consumer 1: P1 = 60 - Q
Consumer 2: P2 = 100 - Q
Consumer 3: P3 = 140 - Q
where Q measures the number of units of the good and P is the price in dollars. The marginal cost of the public ...

#### Solution Summary

Marginal Social Benefits are depicted.

\$2.19