Is land preservation considered a public good? On one graph draw the MPB, MSB, and MPC = MSC curves. Please denote the ambers for all intercepts.
Is land preservation considered a public good? On one graph draw the MPB, MSB, and MPC = MSC curves. Please denote the ambers for all intercepts.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:ervation
Suppose a very small town is trying to decide how many acres of endangered lands Ie shoina
preserve. There are ONLY 500 people (n = 500) in this town, each with an identical margifnal
benefit (MPB) function of the following form:
MPB = 20 – 0.40(Q);
where Q is the number of acres preserved, and P is the per acre price one is willng to pay 1oi c
acres of preserved land. The total cost function for land preservation is TC = 3,000(@).
a.
Why is land preservation considered a public good?
b.
Un one graph draw the MPB, MSB, and MPC = MSC curves. Please denote the
numbers for all intercepts.
What is the private market equilibrium price and quantity for acres of land
preservation? Why?
Transcribed Image Text:d.
What is the socially efficient outcome?
e.
What is the value of net benefits at the socially efficient equilibrium?
f.
What is existence value? How would you attempt to estimate it?
Revealed preference is a category of valuation methods derived from observable
g.
market choices. The indirect method of using these observed markets choices infers values
to construct market demand. Please list two indirect, revealed preference methods.
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