There are two consumers of mosquito abatement (a public good), Dash and Lily. Dash's benefit from mosquito abatement is given by MBD = 100 - Q, where Q is the quantity of mosquito abatement. Lily's benefit is given by MB2 = 60 – Q. a. Calculate the total marginal benefit, MBr. b. Suppose that mosquito abatement can be provided at a marginal cost of MC = 2Q. Find the socially optimal level of abatement. c. If mosquito abatement is privately supplied, what quantity will be supplied by Dash, and what quantity will be supplied by Lily? Briefly explain.

There are two consumers of mosquito abatement (a public good), Dash and Lily. Dash's benefit from mosquito abatement is given by MBD = 100 - Q, where Q is the quantity of mosquito abatement. Lily's benefit is given by MB2 = 60 – Q. a. Calculate the total marginal benefit, MBr. b. Suppose that mosquito abatement can be provided at a marginal cost of MC = 2Q. Find the socially optimal level of abatement. c. If mosquito abatement is privately supplied, what quantity will be supplied by Dash, and what quantity will be supplied by Lily? Briefly explain.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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