solution

 

Suppose the following data represent the prices that each of three consumers is willing

to pay for snowplowing:

 

Quantity

 Consumer A

 Consumer B

Consumer C

1

$50

 $40

 $30

2

30

 20

 20

3

20

 15

 10

(a) Construct the market demand curve for snowplowing on the graph above (right).

(b) If the market price of snowplowing were $40, how many units would be demanded?

(c) Now suppose that this is a public good, in the sense that all consumers receive satisfaction

from the good even if only one person buys it. Under these conditions, what is the social

value of the

(i) First unit?

(ii) Second unit?

 

 
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