Bower likes to plant trees in his front year. His neighbors also derive pleasure form the trees in hisfront year. That is, Bower's trees provide a positive externality for the neighborhood. His marginalprivate benefit and the marginal social benefit (his and that received by his neighbors combined) arerepresented on the graph below, along with the marginal cost of planting a tree.Price, Cest (oll)$S0.0045.00.40.00A35.000 00Margiaal Cot25.0020.0015.00argnel Soeiel Benettje 005.00agnal hirde Bandfil24 5Quantity (mber of trees)Suppose the neighborhood subsidies Bower's trees. That is, neighbors give him enough money toplant the socially optimal number of trees. What area on the graph would be equal to the net socialgain resulting form the subsidy?OAВOcOA+ B

Answered: Image /qna-images/answer/5562e493-7452-4906-86ca-b5d21415513d.jpg

Bower likes to plant trees in his front year. His neighbors also derive pleasure form the trees in his front year. That is, Bower's trees provide a positive externality for the neighborhood. His marginal private benefit and the marginal social benefit (his and that received by his neighbors combined) are represented on the graph below, along with the marginal cost of planting a tree. Prie, Cest (kole) $ 00 45.00 40.00 1.00 00 Mgial Ou 25.00 20.00 15.00 10.00 1.00 I 4 S68 Quanity (mber of wees) Suppose the neighborhood subsidies Bower's trees. That is, neighbors give him enough money to plant the socially optimal number of trees. What area on the graph would be equal to the net social gain resulting form the subsidy? OA OB Oc OA+B

Bower likes to plant trees in his front year. His neighbors also derive pleasure form the trees in his front year. That is, Bower's trees provide a positive externality for the neighborhood. His marginal private benefit and the marginal social benefit (his and that received by his neighbors combined) are represented on the graph below, along with the marginal cost of planting a tree. Prie, Cest (kole) $ 00 45.00 40.00 1.00 00 Mgial Ou 25.00 20.00 15.00 10.00 1.00 I 4 S68 Quanity (mber of wees) Suppose the neighborhood subsidies Bower's trees. That is, neighbors give him enough money to plant the socially optimal number of trees. What area on the graph would be equal to the net social gain resulting form the subsidy? OA OB Oc OA+B

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter17: Long-term Investment Analysis

Section: Chapter Questions

Problem 2.4CE

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