On the basis of the three Individual demand schedules below, and assuming these

Question

On the basis of the three Individual demand schedules below, and assuming these three people are the only ones In the society, determine (a) the market demand schedule on the assumption that the good is a private good and (b) the collective demand schedule on the assumption that the good Is a public good. (b) Public Demand Instructions: Enter your answers as whole numbers (In the gray-shaded cells). (a) Private Demand Individual #3 Individual #2 Price Individual #1 Qd Price $16 14 12 10 Qd Price Qd Price $16 14 12 10 Qd Price $16 14 12 10 $16 14 12 10 4 4 6 4 4 4 4 4

Explanation / Answer

For private demand simply sum up, all three demand horizontally and the last column in this table gives us the total private demand -

To find the demand for public good, simply add the price that each consumer is willing to pay for the first unit, second unit and so forth.
For e.g. for 1st unit, person 1 can pay maximum $12, person 2 can pay maximum $16 and person 3 can pay maximum $16, then the price corresponding to 1 unit will be equal to 12 + 16 +16 = $44. Same way we can find the demand for public good as shown below:

P1 Q1 P2 Q2 P3 Q3 Price Qd 16 0 16 1 16 1 16 2 14 0 14 2 14 2 14 4 12 1 12 3 12 3 12 7 10 2 10 4 10 4 10 10 8 3 8 5 8 5 8 13 6 4 6 6 6 6 6 16 4 5 4 7 4 7 4 19 2 6 2 8 2 8 2 22

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