5cii Free ridership is a person who seeks to enjoy the benefits of a public

5cii free ridership is a person who seeks to enjoy

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5.c.ii) Free-ridership is a person who seeks to enjoy the benefits of a public good without contributing anything to the cost of financing the amount made available. Free riders want to enjoy the benefits of such goods while hoping for someone else to pay for it. Under a system of voluntary contributions when large numbers of people are involved, attempts by individuals to play the free-rider strategy almost guarantee that the equilibrium amount of pure public good will be less than efficient amount. Hence, voluntary cost sharing of public goods will result in insufficient amount of public goods being produced relative to the efficient amount. 5.d) The demand for pure private goods is the sum of the quantity demanded by all consumers at each possible price per unit of the good. Since the cost is at RM400, Household A demands 2 drainage system. It is the quantity for which the marginal benefit, MB A = RM400. Household B demands 1 drainage system because it is the quantity for which the marginal benefit, MB B = RM400. Finally, household C willing to buy 2 units of drain at RM400. Therefore, MB C = RM400. Add all up, we could get the total demand by the households is 5 units of drainage system. MC = RM400, D = MB A + MB B + MB C = 2 + 1 + 2 = 5 units of drainage
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  • Summer '16
  • Public Good, Externality, PROFESSOR ZAHARIAH MOHD ZAIN, household C refuse

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