Assume there are only 3 people in the economy. They are Abbot, Costello, and Harvey. Their demand for a public good is as follows:
Abbot: QD = 10 - 0.5P
Costello: QD = 15 - P
Harvey: QD = 20 - 4P
Assume that the supply for the public good is QS = 0.5P.
What is the optimal amount of the public good for this economy and what is the price of the public good?
- 45, $5.50
- 15, $1.83
- 7.62, $15.24
- 3.75, $7.50
- 40, $3.25