Sub: Economics Topic: Public Economics
Examine socially optimal output in public good.
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If hamburger were a public good: (non rival; and non excludable; far fetched safe food as the
public good; if food is relatively safe for one, it is relatively safe for all- the reason that
governments regulate food safety. 0
Bill’s demand: Q = 20-2P
Ted’s demand: Q = 10-P
Social Marginal benefit of hamburger consumption.
Bill’s WTP; (inverse of demand function: P = 10-0.5Q
Ted’s WTP; P =