Qsuppose the state is trying to decide how many miles of a

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Q. Suppose the state is trying to decide how many miles of a very scenic river it should preserve. There are 100 people in the society, each of them has an identical inverse demand function given by P=10-1.0q, where q is the number of miles preserved and P is the per-mile price he or she is willing to pay for q miles of preserved river.

(a) If the marginal cost of preservation is $500 for every mile, explain how many miles would be preserved in an efficient allocation?

(B) How large is the economic surplus?

Reference no: EM13354115

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