Final answer:
The equilibrium price for a public good like snowplowing, when the allocatively efficient output is produced, is typically zero, as these services are often funded by taxes and provided without direct charges. The equilibrium quantity is the allocatively efficient level of provision, though this cannot be determined without further data. The concept differs for private goods, where price and quantity are established at the intersection of supply and demand, which can be affected by externalities.
Step-by-step explanation:
If Sally and Mike are withholding their true demands for snow plowing, and this good is provided publicly, we cannot determine the specific equilibrium price and quantity without additional information. However, in the context of public goods and market efficiency, we typically see that the allocation of resources for public goods (like snowplowing) does not occur through the market. Hence, when the allocatively efficient output is produced for a public good like snowplowing, the equilibrium price is typically zero because public goods are often financed through taxation and provided free at the point of use. The equilibrium quantity would be the amount where the collective willingness to pay equals the cost of provision, which is essentially the allocatively efficient output level. This is in contrast to private goods, where the equilibrium price and quantity are determined by the intersection of supply and demand curves, as explained using a model with a firm playing trumpets on the streets.
For instance, as shown in an example from Table 12.3 where the supply and demand conditions for a firm that plays trumpets are given, the original equilibrium before accounting for external social costs such as pollution might occur at a price of $15 and a quantity of 440. Taking into account the external costs might lead to a new equilibrium at a price of $30 and a quantity of 410, as seen in the case of incorporation of negative externalities into supply curves.