Econ 102

_______________________________________________________________________

Read these instructions carefully!

• Carefully answer each of the questions below.

• You can write or type your answers for the questions EXCEPT ANY GRAPHS MUST BE COMPLETED BY HAND (NOT USING THE DRAWING TOOLS IN WORD OR ANY OTHER PROGRAM).

• Please put your name and PSU ID number at the top of the 1st page.

• You may use as many sheets of paper as you need.

• When you are finished, scan your entire document (including the parts you typed and the parts done by hand).

• Save the file on your computer (.PDF format preferred) and then upload it to the ANGEL drop box for this homework assignment.

1. (20 points)

|Quantity of the public |Willingness to pay of |Willingness to pay of |Society's |

|good |person 1 |person 2 |willingness to pay |

|1 |65 |35 | 100 |

|2 |55 |25 | 80 |

|3 |45 |15 | 60 |

|4 |35 |5 | 40 |

|5 |20 |0 | 20 |

The table above shows the willingness to pay for various units of a public good for the only two individuals in a society. The willingness to pay is the willingness to pay per unit of the public good. For example, person 1 is willing to pay $55 per unit of the public good for two units. To put it another way, if the price to person 1 of two units of the public good is $55, then person 1 would want to purchase 2 units of the public good. (If you were to plot person 1’s willingness to pay for the public good with quantity on the horizontal axis and willingness to...