Calculate the marginal costs and benefits

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The following table displays hypothetical annual total costs and total benefits of conserving wild tigers at several possible worldwide tiger population levels.

Population of

Total Cost

Total Benefit

Wild Tigers

($ millions)

($ millions)

0

0

40

2,000

25

90

4,000

35

130

6,000

50

160

8,000

75

185

10,000

110

205

12,000

165

215

a. Calculate the marginal costs and benefits.

b. Given the data, what is the socially optimal world population of wild tigers?

c. Suppose that tiger farming is legalized and that this has the effect of reducing the marginal cost of tiger conservation by $15 million for each 2,000-tiger population increment in the table. What is the new socially optimal population of wild tigers?

Reference no: EM131145043

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