Adam and Eve live on two sides of the Garden of Eden, a small suburban development. After they move in, an old dump containing the carcinogenic chemical polychlorinated biphenyl (PCB) is discovered between their houses. If X total tons of PCBs are removed from the dump, Adam and Eve have a true WTP to finance a cleanup as follows: Adam’s WTP is higher than Eve’s. Does this necessarily imply that Eve is less concerned than Adam about exposure to PCBs? Why or why not? Draw one diagram illustrating the two individuals’ demand curves for cleanup and the total demand for cleanup in the neighborhood. What is the total WTP for 3 tons of cleanup? For 4 tons? If cleaning up 2 tons were to cost $12, is the WTP in this small community sufficient to finance it? What are the two potential reasons why a voluntary cleanup might nevertheless fail?
Adam and Eve live on two sides of the Garden of Eden, a small suburban development. After they move in, an old dump containing the carcinogenic chemical polychlorinated biphenyl (PCB) is discovered between their houses. If X total tons of PCBs are removed from the dump, Adam and Eve have a true WTP to finance a cleanup as follows: Adam’s WTP is higher than Eve’s. Does this necessarily imply that Eve is less concerned than Adam about exposure to PCBs? Why or why not? Draw one diagram illustrating the two individuals’ demand curves for cleanup and the total demand for cleanup in the neighborhood. What is the total WTP for 3 tons of cleanup? For 4 tons? If cleaning up 2 tons were to cost $12, is the WTP in this small community sufficient to finance it? What are the two potential reasons why a voluntary cleanup might nevertheless fail?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Adam and Eve live on two sides of the Garden of Eden, a small suburban development. After they move in, an old dump containing the carcinogenic chemical polychlorinated biphenyl (PCB) is discovered between their houses. If X total tons of PCBs are removed from the dump, Adam and Eve have a true WTP to finance a cleanup as follows:
Adam’s WTP is higher than Eve’s. Does this necessarily imply that Eve is less concerned than Adam about exposure to PCBs? Why or why not?
Draw one diagram illustrating the two individuals’ demand curves for cleanup and the total demand for cleanup in the neighborhood. What is the total WTP for 3 tons of cleanup? For 4 tons?
If cleaning up 2 tons were to cost $12, is the WTP in this small community sufficient to finance it? What are the two potential reasons why a voluntary cleanup might nevertheless fail?
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