2: Suppose the state is trying to decide how many miles of a very scenic river it should preserve. There are 100 people in the community, each of whom has an identical demand function given by P=10-1.0q, where q is the number of miles preserved and P is the per mile price he or she is willing to pay for q miles of preserved river. Hint: treat this river as a public good. If the marginal cost of preservation is $500 per mile, how many miles would be preserved in an efficient allocation? B. What are the net benefits associated with the preservation project?
2: Suppose the state is trying to decide how many miles of a very scenic river it should preserve. There are 100 people in the community, each of whom has an identical demand function given by P=10-1.0q, where q is the number of miles preserved and P is the per mile price he or she is willing to pay for q miles of preserved river. Hint: treat this river as a public good. If the marginal cost of preservation is $500 per mile, how many miles would be preserved in an efficient allocation? B. What are the net benefits associated with the preservation project?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Q2: Suppose the state is trying to decide how many miles of a very scenic river it should preserve. There are 100 people in the community, each of whom has an identical demand function given by P=10-1.0q, where q is the number of miles preserved and P is the per mile price he or she is willing to pay for q miles of preserved river. Hint: treat this river as a public good.
- If the marginal cost of preservation is $500 per mile, how many miles would be preserved in an efficient allocation?
B. What are the net benefits associated with the preservation project?
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