Suppose a farmer along Lake Lansing uses insecticides. The insecticide runs off into Lake Lansing causing it to become more polluted and increasing the growth of algae along the shoreline. Suppose the farmer's profits increase by $200 for each additional ton of fertilizer used until the farmer reaches 6 tons and then the profits do not increase at all if increase fertilizer use beyond 6 tons. Suppose the total cost (to people who live along the shoreline, use the beaches and fish) of different levels of fertilizer is given in the table below. (Note how difficult it would be to accurately measure this cost.) Unit of fertilizer 0 1 2 3 4 Total Cost $0 $50 $120 $240 $400
Suppose a farmer along Lake Lansing uses insecticides. The insecticide runs off into Lake Lansing causing it to become more polluted and increasing the growth of algae along the shoreline. Suppose the farmer's profits increase by $200 for each additional ton of fertilizer used until the farmer reaches 6 tons and then the profits do not increase at all if increase fertilizer use beyond 6 tons. Suppose the total cost (to people who live along the shoreline, use the beaches and fish) of different levels of fertilizer is given in the table below. (Note how difficult it would be to accurately measure this cost.) Unit of fertilizer 0 1 2 3 4 Total Cost $0 $50 $120 $240 $400
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter13: Positive Externalities And Public Goods
Section: Chapter Questions
Problem 23P: HighFlyer Airlines wants to build new airplanes with greatly increased cabin space. This will allow...
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