How large are the annual net benefits

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Reference no: EM131246000

Efficient regulation. Suppose the state is trying to decide how many miles of a very scenic river it should preserve. There are 1000 people in the community, each of whom has an identical demand function given by

Q = 40−0.4P

(a) If the marginal cost of preservation is $25, 000 per mile per year, how many miles would be preserved in an efficient allocation?

(b) How large are the annual net benefits?

Reference no: EM131246000

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