Suppose the state is trying to decide how many miles of a very scenic river it should

Question:

Suppose the state is trying to decide how many miles of a very scenic river it should preserve. There are 100 people in the community, each of whom has an identical inverse demand function given by P = 10 – 1.0q, where q is the number of miles preserved and P is the per-mile price they are willing to pay for q miles of preserved river.

(a) If the marginal cost of preservation is $500 per mile, how many miles would be preserved in an efficient allocation?

(b) How large is the economic surplus?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question
Question Posted: