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About Chap2. Public Goods and Private Goods
The document discusses public goods and private goods in the context of two roommates, Cecil and Dorothy. It defines a public good as a social decision variable that enters more than one person's utility function. For Cecil and Dorothy, the size of their shared flat is the only public good. The document derives the necessary conditions for an optimal allocation using Lagrange multipliers, showing that the sum of Cecil and Dorothy's marginal rates of substitution between flat size and private goods must equal the cost of an extra unit of flat space.
Detailed Information
| Author: | ['Citio Logos'] |
|---|---|
| Publication Year: | 2017 |
| Pages: | 18 |
| Language: | English |
| Format: | |
| Price: | FREE |
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