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.

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Business

Felicity Fritz

7 September, 22:19

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.

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Rayan · Answer 1

Private Good Market Demand Schedule : Horizontal (Quantity wise summation) of individual demand curves, schedules.

Public Good Market (Collective) Demand Schedule : Vertical (Price wise summation) of individual demand curves, schedules.

Explanation:

The total quantity of good all market buyers are able & willing to buy at a price, period of time : is graphically represented by Market Demand Curve, is tabularly represented by Market Demand Schedule

Private Good is an excludable rival good. Public good is a non excludable non rival good.

Market demand schedule of private good is:

Graphically, the horizontal summation of individual demand curves Schedule wise, added total quantity demanded at corresponding price

Market Demand schedule of public good is:

Graphically, the vertical summation of individual supply curves. Schedule wise, added total willingness to pay for a given corresponding social quantity