URGENT: 1. In a country there are 4 types of individuals The utility function of the type is given by: Ui(xi, G) = xi +
Posted: Sun Jun 05, 2022 4:45 pm
URGENT:
1. In a country there are 4 types of individuals The utility function of the type is given by:
Ui(xi, G) = xi + i * ln G ; i=1,2,3,4
where, denotes the private good consumed by each citizen and denotes the public good.
The first type has 2 individuals, the second type has 3 individuals, the third and the fourth type have 2 individuals each. The marginal cost of providing the public good is 9/-.
a. Compute the efficient level of provision of the public good.
b. Assume that the local government asks the voters to directly decide about level of informing them that for each unit of the public good, each of them will be asked to pay a contribution equal to 1. What would be the preferred level of by each of the four subgroups be? Which would come out of the voting process?
(10 marks)
1. In a country there are 4 types of individuals The utility function of the type is given by:
Ui(xi, G) = xi + i * ln G ; i=1,2,3,4
where, denotes the private good consumed by each citizen and denotes the public good.
The first type has 2 individuals, the second type has 3 individuals, the third and the fourth type have 2 individuals each. The marginal cost of providing the public good is 9/-.
a. Compute the efficient level of provision of the public good.
b. Assume that the local government asks the voters to directly decide about level of informing them that for each unit of the public good, each of them will be asked to pay a contribution equal to 1. What would be the preferred level of by each of the four subgroups be? Which would come out of the voting process?
(10 marks)