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
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$0.50 |
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$5.00 |
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$50.00 |
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$500.00 |
Marginal benefit=25-5X
P=25-5X
since there are 50 homeowner then market demand=1250-250X
at optimality, Price=MC=250=1250-250X
Thus 250X=1000. X=4 and each one pays MB=25-5(4)=5
ans is B
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? 0 units 93 units 117 units 212 units