combining the amounts of the public good that the individual members of society demand at each price. The consumer buys OX units of good X. A demand curve for a public good is determined by: summing vertically the individual demand curves for the public good. e is the initial optimal consumption combination on indifference curve U. When as a result of the rise in the income of the people, the demand increases, the whole of the demand curve shifts upward and vice versa. The greater income means the greater purchasing power. A. 1.4(d), this curve has been obtained to be DD. Map out the market demand curve for this public good, and determine the optimal amount of production. b) Suppose the good is purely public, for example a street lights installed in the neighbor-hood. Lets look at an example, firstly for a private good. Public goods – continuous. AB is the initial price line. It is obvious from the method of obtaining the market demand curve that the market demand curve for a good is the horizontal summation of its individual demand curves. 1.4(d), the market demand curve for the product is obtained. FIGURE.1 Derivation of the Demand Curve: Normal Goods. This is in contrast to the procedure for deriving the aggregate demand for a private good, where individual demands are summed horizontally. In contrast, the market demand curve for a public good is the vertical sum of the individual demand curves. To see more clearly that the demand curve for a public good represents a vertical summation of individual demand curves, let us generate an aggregate demand curve from two individual consumers with straight-lined demand curves. Notice that the market demand curve has the same vertical intercept as individual demands, has half of the slope and twice the horizontal intercept. Now join these points by a curve in Fig. Below are the demand curves for a public good in a two person economy. The generation of a market demand curve for a private good is now completed. multiplying the per-unit cost of the public good by the quantity made available. In this case, individual consumers will all consume the same amount of the good, but each may value that public good at a different price or valuation. In drawing the demand schedule or the demand curve for a good we take income of the people as given and constant. Therefore, when incomes of the people increase, they can afford to buy more. Graphically, non-rivalry means that if each of several individuals has a demand curve for a public good, then the individual demand curves are summed vertically to get the aggregate demand curve for the public good. So in the public goods case, everyone consumes the same quantity, but each has different prices or valuations for the public good. 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