Society is made up of two individuals Bert and Ernie whose d

Society is made up of two individuals, Bert and Ernie, whose demands for public good A are given in the figure on the right. 105DE Bert\'s demand is: 95 90 85 QB-50-1.0PA 75 70 - 65 Ernie\'s demand is: -50-0.5PA n 60- 2 551Ds E 50 45 40 35 30 25 20 15 10 a. Assume that the public good can be produced at a constant marginal cost of $10 The optimal level of output is units. (Round your response to the nearest integer.) 10 20 3040 50 60 708 Units of output QA

Solution

Market demamd curve for public good will be the vertical summation of individually demand curve.

Bert inverse demand curve will be Pa=50-Qa

Emies demand curve will be Pa=100-2Qa

Thus market demand curve will be P=150-3Qa

And MC=10

Thus for optimal output 150-3Qa=10

Qa=140/3=46.667