pose a gated housing community includes 150 identical households. It is cos naintain the roads in the gated community. Suppose each household ha ginal benefit MB = 200 – 25M for each mile of road maintained. The to of maintaining roads is given by C = 20000M (MC=20000). . the residents have to pay individually to maintain the roads in the vicir Ift of their property, how many miles of roads will each household choose maintain on their own? . How many miles of roads should be maintained for the commur considering the public good nature of roads? . Suppose the community association could charge a flat fee to households to fund the maintenance of the roads. How much should this be per household and what is the total cost of maintaining the socia efficient level of this public good? . Draw the individual marginal benefit curves, overall marginal benefit a the marginal cost curve. Identify and calculate the net social benefit of public good.

pose a gated housing community includes 150 identical households. It is cos naintain the roads in the gated community. Suppose each household ha ginal benefit MB = 200 – 25M for each mile of road maintained. The to of maintaining roads is given by C = 20000M (MC=20000). . the residents have to pay individually to maintain the roads in the vicir Ift of their property, how many miles of roads will each household choose maintain on their own? . How many miles of roads should be maintained for the commur considering the public good nature of roads? . Suppose the community association could charge a flat fee to households to fund the maintenance of the roads. How much should this be per household and what is the total cost of maintaining the socia efficient level of this public good? . Draw the individual marginal benefit curves, overall marginal benefit a the marginal cost curve. Identify and calculate the net social benefit of public good.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

15. Suppose a gated housing community includes 150 identical households. It is costly
to maintain the roads in the gated community. Suppose each household has a
marginal benefit MB = 200 – 25M for each mile of road maintained. The total
cost of maintaining roads is given by C = 20000M (MC=20000).
i. If the residents have to pay individually to maintain the roads in the vicinity
of their property, how many miles of roads will each household choose to
maintain on their own?
j. How many miles of roads should be maintained for the community
considering the public good nature of roads?
k. Suppose the community association could charge a flat fee to the
households to fund the maintenance of the roads. How much should this fee
be per household and what is the total cost of maintaining the socially
efficient level of this public good?
1. Draw the individual marginal benefit curves, overall marginal benefit and
the marginal cost curve. Identify and calculate the net social benefit of the
public good.

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