Wed 13 Apr, 2016 12:39 am
I have a private good, x and public good y. Two people A and B consume with budget constraints of Xa+Ya=70, Xb+Yb=70 where Px=Py=1.
Utility functions for A and B are the same, UA= 3InXa+InY, UB=3InXb+InY where Y=Ya+Yb.
I don't know how to find optimal consumptions for Ya, Yb and pareto efficient consumptions of Ya, Yb.
I can say that MRSa=MRSb=Xa/3Y=Xb/3Y=(Px/Py)=1.
But I'm stuck from this point on. Any help?