Find the optimal width of the road

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Reference no: EM13887843

Suppose that the government is deciding how wide to make a public road that services one resident named Bob. Bob’s willingness to pay for each metre of road is described by 20 – 2Q.

a. Graph Bob’s willingness to pay (demand) curve. Suppose that the marginal cost for each meter of road is described by MC=2Q. Find the optimal width of the road.

b. A second resident named Doug moves into a house on the road in question, and Doug’s willingness to pay is described by 10-Q. Graph Doug’s willingness to pay curve. Then derive the collective demand curve and draw it on a graph.

c. Find the new optimal road width.

Reference no: EM13887843

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