Estimate the optimal level of provision, Macroeconomics

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.

 

Posted Date: 3/19/2013 5:57:32 AM | Location : United States







Related Discussions:- Estimate the optimal level of provision, Assignment Help, Ask Question on Estimate the optimal level of provision, Get Answer, Expert's Help, Estimate the optimal level of provision Discussions

Write discussion on Estimate the optimal level of provision
Your posts are moderated
Related Questions
Automobiles arrive at the Elkhart exit of the Indiana Toll Road at the rate of two per minute. The distribution of arrivals approximates a Poisson distribution. A) What is the prob

Sims (1980) introduced an exciting and ground-breaking new framework which would prove to be extremely insightful for macroeconomic analysis. This is known as vector autoregression

term paper on determinat and multiplier of money supply

Consider a market where supply and demand are given by QXS = -18 + PX and QXd = 90 - 2PX. Suppose the government imposes a price floor of $41, and agrees to purchase any and all un

What factors find out the price elasticity of demand? Factors which determine the price elasticity of demand are: a. Whether close substitutes are accessible b. Whether t


DEMOGRAPHIC FEATURES IN DEVELOPMENT: We have learned in the previous unit that human resources play a significant role in generating aggregate flow of goods and services. The

Over the last year both the supply and demand for oil in the US has gone up. What might have caused this and what happened to the price and quantity of oil?

Find the labor force, the working-age population, the number of employed workers, and the number of unemployed workers. Unemployment rate 5.60 % Participation rate 62.50

Q. Important points about the classic model? The most important points about the classic model are as following:  Monetary and fiscal policy can't affect the GDP or unem