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

International trade, what does international trade fails to its claims ?

what does international trade fails to its claims ?

Difference between economic growth and economic development, What is the di...

What is the difference between economic growth and economic development? Growth is only individual dimension of development. Economic development is a complicated multi-dimensio

State about the gross domestic product, Gross domestic product Definit...

Gross domestic product Definition Perhaps the most significant concept in macroeconomics is Gross Domestic Product (GDP): Gross Domestic Product (GDP) is defined as the

National income, # ???? .. difference between gdp at market price and nnp...

# ???? .. difference between gdp at market price and nnp at factor cost

Onfidence interval for the population, A local movie theater wants to know ...

A local movie theater wants to know how much popcorn they should stock for a given movie showing. Records from 94 movies reveal a mean of 57 boxes and a standard deviation of 17.8.

What are the costs of economic growth, What are the costs of economic growt...

What are the costs of economic growth? Economic growth can result also into: • Increases within pollution noise and congestion • Unnecessary depletion of non-renewable r

Relate overnight interest rates with interest rates, Relate overnight inte...

Relate overnight interest rates with interest rates By controlling overnight interest rates, the central bank will affect the interest rates with longer maturity. The reason f

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