Problem
Assume that all individuals have identical preferences but some individuals are wealthier than others. Assume there is a single public good and a single private good.
a. Show diagrammatically how you derive the demand curve for the public good, as a function of the tax price charged the individual.
b. Assume that the demand function is of the form
G = kY/p,
where kis a constant (less than 1), Yis income, and p is the tax price. This says that when income doubles the demand for public goods doubles, but when the tax price doubles the demand is cut in half. If the tax mice is proportional to the individual's income (as with proportional taxation), how will demand for public goods differ among those with different incomes?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.