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Suppose there are only two individuals in society. The demand curve for tsetse fly control for person A is given by:
qa= 100 - P
The corresponding demand curve for person B is:
qb = 150 - P
where P is the price that i is willing to pay for tsetse fly control.
i. Suppose tsetse fly control is a pure public good, what would be the optimal level of this activity if it could be produced at a constant marginal cost of 100$ per unit?
ii. If tsetse fly control were left to the private market, will an optimal amount be produced? Explain your answer.
iii. If the government were to produce the optimal amount of tsetse fly control, how much will this cost? How should the tax bill for this amount be allocated between the individuals if they are to share it in proportion to benefits received from tsetse fly control?
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a. Calculate the net present value of his migration.
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An agricultural engineer from Nebraska has discovered a new method of milk extraction that causes less swelling to a cow's udders, and therefore each cow has a faster recovery time between milkings.
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