1. Suppose Brazos County is considering preserving certain miles of Navasota River, butthey have no clue how many miles of the river they should preserve. The county officialsare seeking advice from a bright environmental economist. They contacted you for help.Suppose marginal benefit for preserving the river is given by P = 10 - ½ q and marginalcosts are 2 + ½ q. You are asked to answer the following questions for the country office.Show the work.a) What is the net benefit of preserving six miles of the river?b) What is the benefit/cost ratio of preserving six miles of the river?c) How many miles of Navasota River should the Brazos County preserve? Why?

Answered: 1. Suppose Brazos County is considering…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Suppose Brazos County is considering preserving certain miles of Navasota River, but
they have no clue how many miles of the river they should preserve. The county officials
are seeking advice from a bright environmental economist. They contacted you for help.
Suppose marginal benefit for preserving the river is given by P = 10 - ½ q and marginal
costs are 2 + ½ q. You are asked to answer the following questions for the country office.
Show the work.
a) What is the net benefit of preserving six miles of the river?
b) What is the benefit/cost ratio of preserving six miles of the river?
c) How many miles of Navasota River should the Brazos County preserve? Why?

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1) Externality is an economic term that refers to expenditures or benefits obtained by a third party who has no influence over the development of the benefits or costs. Externalities can be either positive or negative, and they can be caused by the consumption or production of goods or services. It can be either private or societal, affecting either the company or society as a whole.

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