Estimate the optimal level of provision, Macroeconomics

Assignment Help:

There are a lot of mosquitoes in the island of Liholiho. Only two people live in this island, Robinson Crusoe and Man Friday. Their respective demand curves for mosquito control are given by Pc = 120 - 2Qc and Pf = 260 - 4Qf, where c stands for Crusoe, f stands for Friday, and Q and P are quantity and price of mosquito control. Suppose that mosquito control is a public good.

(a) What is the optimal level of provision of this good if it can be produced at a constant marginal cost of $80 per unit?

(b) What would it cost the Government of Liholiho to provide the optimal amount of mosquito control?

(c) How should the tax bill be allocated between the two individuals if they are to share it in proportion to the total benefits from mosquito control received by each individual?

(d) If mosquito control were left to the private market, how much would be provided? Does your answer depend on what each person assumes the other would do? Explain.

 


Related Discussions:- Estimate the optimal level of provision

United states population, In 2010, Forbes magazine listed Bill Gates, the f...

In 2010, Forbes magazine listed Bill Gates, the founder of Microsoft, as the richest person in the United States. His personal wealth was estimated to be $53 billion. If there were

Islm curve, why lm curve upward sloping and is curve downward sloping?

why lm curve upward sloping and is curve downward sloping?

Marginal approach to profit maximization, The marginal approach to profit m...

The marginal approach to profit maximization means that a firm should produce until a. marginal revenue equals zero b. marginal revenue equals marginal costs c. marginal cost becom

Money market with inflation and rising money supply, Q. Money market with i...

Q. Money market with inflation and rising money supply? Figure: The money market with inflation and rising money supply If we let π M refer the growth rate in money

Classical model and the long-term phillips curve, Q. Classical model and th...

Q. Classical model and the long-term Phillips curve? In classical model, L and real wage are determined from equilibrium conditions in the labor market. L and W/P, hence, are o

Can growth arise without development, Can growth arise without development?...

Can growth arise without development? Growth is just one feature of development and therefore is an essential but not enough condition for economic development. For example, g

State the term- - gdp is a flow, State the term- - GDP is a flow Lastl...

State the term- - GDP is a flow Lastly, note that GDP is a flow variable and not a stock variable. By a flow variable we mean a variable which is measured in something per uni

Macroeconomics , 1. Nations trade what they produce in excess of their own ...

1. Nations trade what they produce in excess of their own consumption to: A) generate jobs for the domestic economy. B) earn “good will” from the World Bank. C) prevent chronic sur

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd