Price * 50% Price * 25% Price * 0%
Qfull price QPrice * 50% QPrice * 25%
Q Now lets look at another demand curve (Person 2). This person sees the vertical axis flipped the other way around, with the full price on the bottom and percentage decreasing as one moves upward. Like Person 1, Person 2 will demand more as her observed price goes down. Price * 0%
Price * 50%
Full price Qfull price
QPrice * 50%
This differs from equilibrium of private goods, which instead has all agents viewing the same price with the possibility to consume different quantities. Prepared by Nick Sanders, UC Davis Graduate Department of Economics 2006
Again, note that here Person 2’s observed price going down means we move further up the vertical axis. Equilibrium is when both of these people demand the same amount of the public good. This happens when the two demand curves intersect each other. If we draw a line over to the price axis from that point of intersection, we get the percentage share for each agent that is...