Just north of the town of Muskrat, Ontario, is the town of Brass Monkey, population 6900. Brass Monkey, like Muskrat, has a single public good, the town skating rink, and a single private good, Labatt Ale. Everyone's utility function is Mi = Mi 81 Y' where x; is the number of bottles of ale consumed by i and Y is the size of skating rink in square meters. The price of ale is $1 per bottle. The cost of skating rink to the city is $6 per square meter. Everyone has an income of

Just north of the town of Muskrat, Ontario, is the town of Brass Monkey, population 6900. Brass Monkey, like Muskrat, has a single public good, the town skating rink, and a single private good, Labatt Ale. Everyone's utility function is Mi = Mi 81 Y' where x; is the number of bottles of ale consumed by i and Y is the size of skating rink in square meters. The price of ale is $1 per bottle. The cost of skating rink to the city is $6 per square meter. Everyone has an income of

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Please answer just the number IV part.
Given a MC function and a MB funtion for a good (e.g., MC = 10 + Q, MB = 5 - Q ,how do we derive an efficient allocation for the good? What if we add a per-unit externality (e.g., set to some constant =5 per unit emissions from production)?
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= QB.
Your own a chocolate producing company which can advertise on both television (T) and internet(I). The effect of TV and online commercials on sales is again given byS(T,I) = 500 + 48T−6T2+ 112I−6I2+ 4TI. You have a budget of $25 that you can spend on T and I. The price of aTV commercial is $12per unit and the price of an online commercial is also $12 per unit. 1. Determine the optimal level of TV commercials T and online commercials I if you have to spend all of your budget. You should provide two methods to solve this, by direct substitution and by setting up the Lagrangian. Is the Lagrange multiplier positive or negative? Give an intuitive interpretation of why this is the case? 2. Now determine the optimal level of TV commercials T and online commercials I if you DO NOT have to spend all of your budget. Do you obtain the same answer as subquestion 5.1? What is the Lagrange multiplier equal to in this case? Discuss.
1. Dave Grohl wants to buy drums and guitars. Drums are sold in an unusual way. There is only one supplier, and the more drums you buy from him, the higher the price you have to pay per unit. In fact, y units of drums will cost Dave y² dollars. Guitars are sold in the usual way at a price of 2 dollars per unit. Dave's income is 20 dollars, and his utility function is U (x,y) = x+2y, where x is his consumption of guitars and y is his consumption of drums. A. Sketch Dave's budget set and shade its in. B. Sketch some of his indifference curves and label the point that he chooses. C. Calculate the number of drums and guitars that Dave demands at these prices and this income.
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1) Alex spends all his income on blueberries and strawberries. His Marginal Utility of blueberries is MUB=100-B. His total utility of strawberries is Us=900+150S-S². Find Alex's income if the price of blueberries is PB=$8/kg, the price of strawberries is Ps=$10/kg, and Alex consumes 30kg of blueberries. 2) A profit-maximizing monopoly faces a demand curve D(P)=1000-P, has variable costs VC(Q)=Q², and fixed costs equal to $30,000. Find this monopoly's profit.
Benny and Danny live next to each other in a student resident building on campus. Benny is a metal-head (likes loud heavy metal music) and Danny is a bookworm (likes a quiet environment to study). From rocking out to heavy metal, Benny gets a benefit of $100. When Benny’s music is playing Danny suffers a cost of $175. Suppose Benny is given the right to listen to his music. [9] According to the Coase Theorem, describe the transaction, if any, that will be made between Benny and Danny.
suppose the government of a desert community wants to punish excessive water useage, where "excessive" is defined as any usage greater than 100 gallons/week. to do this, the government paces a flat $100 income tax on anyone who consumes more than 100 gallons/week of water in any given week (so this tax could theoretically be levied 52 times per year). people who use less than 100 gallons of water each week will not face this $100 special tax. For these problems, consider the decisions between water consumption, X(sub)w and consumption of a composite good, X(sub)c, where P(sub)w =$2/gallon and the composite good's price is numeraire. suppose michael lives in this desert community and has a weekly income of $1000. 1. graphing michels budget contraint over (X(sub)w , X(sub)c) bundles, what is the slope of his budget conraint for bundles containing MORE than 100 gallons of water? 2. What is the slope of michaels budget constraint at the point (X(sub)w, X(sub)c)=(100,750)? 3. what is the…
Suppose there are two consumers A and B, and two goods x and y. A's utility function has the following form UA = XA - (XB)1. Which of the following is true? Consumer A's consumption of good x exhibits a negative externality. Consumer A's consumption of good x exhibits a positive externality. Consumer B's consumption of good x exhibits a negative externality. Consumer B's consumption of good x exhibits a positive externality.
The town of Wollulung has two residents: Bach (B) and Mozart (M). The town currently funds its free outdoor concert series solely from the individual contributions of these residents. Each of the two residents has a utility function over private goods (X) and total concerts (C), of the form: U = 3 × log(X) + 2× log(C) The total number of concerts given, C, is the sum of the number paid for by each of the two persons: С %3D Св + См Bach and Mozart both have income of 60, and the price of both the private good and a concert is 1. Thus, they are limited to providing between 0 and 60 concerts. a) How many concerts are given if the government does not intervene?
Two individuals A and B have utility functions defined over two goods, a private good 'x') and a public good, 'F. The utility function of an agent 'i' is defined by ui = 2 log xi + log F where F =FA + FB. Each agent has 200 units of private goods x, as his endowment and 1 unit of private good can be transformed into 1 public good F. Answer the following (a) Find the Nash equilibrium values of FA and FB? (b) What is the Pareto optimal level of F? (c) In what condition the Pareto optimal level of F will not depend on the number of private goods? (d) What would be the consumption of x by each agent if they contribute equally towards the public good (F)? (e) Would it change if an agent had a larger endowment of x to begin with?