Question

1. Three families live surrounding a small pond.  The pond is much nicer when someone mows the grass so that you can walk around it. Mowing the grass costs $80.  Each family has a different demand for the number of times per year the grass is mowed:
   Family A:P=100-Q
   Family B:P=100-5Q
   Family C:P=50-Q
   1. On a large graph, plot the three families demand curves.  How many times would each family like the grass mowed if each one was the only household paying?
   2. How many times would each household want the grass mowed if mowing the grass was free?
   3. Solve for the total demand for days of mowed grass.  Notice that this curve will have three linear segments.
   4. If there was a social planner who could maximize the total welfare of all of the families, how many times would the grass get mowed each year?
2. Explain in words why a regulator might want to sell as many permits as firms are willing to buy at some high price in a cap-and-trade system.  Then explain why the regulator might offer to buy as many permits as firms are willing to sell at some low price in a cap-and-trade system.
3. What is a public good?  In words, why do we think that the market will provide too few public goods?

Answer 1

250 نه| د م2 اکا 100 (230) 50 (ترک کا دہ * کی * 30 = دو په ما دا B= 20 Oc=50 A=100 26 grass is freely moves then دی ہے۔ 70- ي =م ما planna shan social af sonal welfare is max when peme= 80 - 30 -. يع = دو و ست و لايك - في= = =