Three individuals, Juan, Madison and Hassan, make up the entire market for some private good. Their marginal willingness-to-pay functions for this good are shown below. The marginal cost of providing this good is MC =25 + 0.25Q Juan MWTP = 100 -Q %3D Madison MWTP = 210 - 2.10 %3D Hassan MWTP = 240 - 2.4Q a) Derive the aggregate MWTP function for this private good b) What is the socially-efficient price and quantity? Graph the aggregate MWTP and MC curve, and identify the socially-efficient price and quantity. c) How much of this good will Juan, Madison and Hassan each decide to consume at this price? d) Compute total willingness-to-pay, total cost and net value at the socially-efficient outcome.

Three individuals, Juan, Madison and Hassan, make up the entire market for some private good. Their marginal willingness-to-pay functions for this good are shown below. The marginal cost of providing this good is MC =25 + 0.25Q Juan MWTP = 100 -Q %3D Madison MWTP = 210 - 2.10 %3D Hassan MWTP = 240 - 2.4Q a) Derive the aggregate MWTP function for this private good b) What is the socially-efficient price and quantity? Graph the aggregate MWTP and MC curve, and identify the socially-efficient price and quantity. c) How much of this good will Juan, Madison and Hassan each decide to consume at this price? d) Compute total willingness-to-pay, total cost and net value at the socially-efficient outcome.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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