There are two consumers of mosquito abatement (a public good), Dave and Lilly. Dave's benefit from mosquito abatement is given by MBD = 100 – Q, where Q is the quantity of mosquito abatement. Lilly's benefit is given by MBL= 60 – Q. a Calculate the total marginal benefit, MBT. b. Suppose that mosquito abatement can be provided at a marginal cost of MC = 2Q. Find the socially optimal level of abatement. c. If mosquito abatement is privately supplied, what quantity will be supplied by Dave, and what quantity will be supplied by Lilly? Briefly explain.
There are two consumers of mosquito abatement (a public good), Dave and Lilly. Dave's benefit from mosquito abatement is given by MBD = 100 – Q, where Q is the quantity of mosquito abatement. Lilly's benefit is given by MBL= 60 – Q. a Calculate the total marginal benefit, MBT. b. Suppose that mosquito abatement can be provided at a marginal cost of MC = 2Q. Find the socially optimal level of abatement. c. If mosquito abatement is privately supplied, what quantity will be supplied by Dave, and what quantity will be supplied by Lilly? Briefly explain.
Chapter17: Externalities And The Environment
Section: Chapter Questions
Problem 2.4P
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There are two consumers of mosquito abatement (a public good), Dave and Lilly. Dave’s benefit from mosquito abatement is given by ??? = 100 − ?, where Q is the quantity of mosquito abatement. Lilly’s benefit is given by ??? = 60 − ?.
a. Calculate the total marginal benefit, ???.
b. Suppose that mosquito abatement can be provided at a marginal cost of ?? = 2?. Find the socially optimal level of abatement.
c. If mosquito abatement is privately supplied, what quantity will be supplied by Dave, and what quantity will be supplied by Lilly? Briefly explain.
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