A village has a water reservoir that individuals A and B have access rights to. Both users A and B want to consume water from the reservoir. The total supply of water there is limited to 14 due to a dry weather this year. User A has inverse demand function: P 20-Q. User A has marginal cost of pumping water from the reservoir (so that he can irrigate his farm): MC=4. For user B, her inverse demand function is P =10-0.5Q. User B has marginal cost of pumping water (so that she can grow fish in her water garden): MC=2. User A's marginal net benefit function (MNB) is MNBA= QA. User B's MNBB%3D QB.

A village has a water reservoir that individuals A and B have access rights to. Both users A and B want to consume water from the reservoir. The total supply of water there is limited to 14 due to a dry weather this year. User A has inverse demand function: P 20-Q. User A has marginal cost of pumping water from the reservoir (so that he can irrigate his farm): MC=4. For user B, her inverse demand function is P =10-0.5Q. User B has marginal cost of pumping water (so that she can grow fish in her water garden): MC=2. User A's marginal net benefit function (MNB) is MNBA= QA. User B's MNBB%3D QB.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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