Suppose there are 50 homeowners living on the lakeshore, and that each has MB = 25...
Suppose there are 50 homeowners living on the lakeshore, and that each has MB = 25 - 5x, where x is the number of tankful that are sprayed. Suppose that the cost of the mosquito spray is $100 for every tankful and that mosquito spray is a pure public good. What is the free market output?
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93 units |
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117 units |
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212 units |
Homework Answers
For free market output, we use demand = supply. Here supply is fixed at MC = $100
Then the demand is MB = 25 - 5x which implies each person can maximum pay $25 for one tank
However each tank requires a minimum contribution of $100
This implies that private market will not be able to supply this pure public good
The correct answer is 0 units.
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Suppose there are 50 homeowners living on the lakeshore, and
that each has MB = 25...
Suppose there are 50 homeowners living on the lakeshore, and that each has MB = 25...
Suppose there are 50 homeowners living on the lakeshore, and that each has MB = 25 - 5x, where x is the number of tankful that are sprayed. Suppose that the cost of the mosquito spray is $250 for every tankful and that mosquito spray is a pure public good. How much would each homeowner pay in a Lindahl equilibrium? options $0.50 $5.00 $50.00 $500.00
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