Note:-Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.Answer completely.You will get up vote for sure. Alex and Becky each rent one unit of a two-unit apartment building. The building has two separate furnaces located between the two apartments. Therenters each control and pay for the heat their furnaces generate and would choose to increase the temperature of their apartments by 30 degrees ifthe other never turned on their furnace, given that the marginal private benefit (MB) of the 30th degree is equal to the marginal cost (MC) of 1 degreeof heat (assume that the MC of heat is constant and that the MB of heat is decreasing). However, each degree of heat paid for by one not only raisesthe temperature in that apartment by a degree but also raises the temperature in the other apartment by half a degree.As a result, if Becky were to buy 10 degrees of heat, then Alex would need to purchase onlymarginal benefit of the final degree was equal to the marginal cost.Use the blue line (circle symbol) to plot Alex's best-response function (BRF) on the following graph, with the total amount of heat he will buy on thevertical axis as a function of the total amount Becky buys (horizontal axis). (Hint: Alex's response to Becky's purchase noted previously representsone point on the line, and the response when Becky purchases 0 degrees of heat will be the vertical intercept.) Then, use the orange line (squaresymbol) to plot Becky's best-response function, with the total amount she will buy (horizontal axis) as a function of the total amount Alex buys(vertical axis). Finally, place the black point (plus symbol) on the graph to indicate the Nash equilibrium amount of heat each person will purchase,given the other's equilibrium choice.Note: Dashed drop lines will automatically extend to both axes.HEAT BOUGHT BY ALEX90802 8 8 982010D01030 40 5070HEAT BOUGHT BY BECKYTrue80 90 100O FalseAlex's BRFBecky's BRF+-Nash EquilibriumSuppose the government is worried about the low temperatures and wants to increase heat consumption.?degrees of heat before his personalTrue or False: The current Nash equilibrium is inefficiently high; therefore, the government should implement a tax on heat to reach its goal.

The goods and services which have the unique characteristic of non-excludability (consumption by one…

Alex and Becky each rent one unit of a two-unit apartment building. The building has two separate furnaces located between the two apartments. The renters each control and pay for the heat their furnaces generate and would choose to increase the temperature of their apartments by 30 degrees if the other never turned on their furnace, given that the marginal private benefit (MB) of the 30th degree is equal to the marginal cost (MC) of 1 degree of heat (assume that the MC of heat is constant and that the MB of heat is decreasing). However, each degree of heat paid for by one not only raises the temperature in that apartment by a degree but also raises the temperature in the other apartment by half a degree. As a result, if Becky were to buy 10 degrees of heat, then Alex would need to purchase only[ marginal benefit of the final degree was equal to the marginal cost. degrees of heat before his personal

Alex and Becky each rent one unit of a two-unit apartment building. The building has two separate furnaces located between the two apartments. The renters each control and pay for the heat their furnaces generate and would choose to increase the temperature of their apartments by 30 degrees if the other never turned on their furnace, given that the marginal private benefit (MB) of the 30th degree is equal to the marginal cost (MC) of 1 degree of heat (assume that the MC of heat is constant and that the MB of heat is decreasing). However, each degree of heat paid for by one not only raises the temperature in that apartment by a degree but also raises the temperature in the other apartment by half a degree. As a result, if Becky were to buy 10 degrees of heat, then Alex would need to purchase only[ marginal benefit of the final degree was equal to the marginal cost. degrees of heat before his personal

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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