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4. Abe, Betty, and Charlie have adjoining houses near a swamp, and they would like to reduce the number of mosquitoes which bite them during
4. Abe, Betty, and Charlie have adjoining houses near a swamp, and they would like to reduce the number of mosquitoes which bite them during their barbecues. Their "demand" or marginal-willingness-to-pay functions for mosquito repellant canisters are given below. The supply curve for mosquito repellent canisters is completely elastic at a price of $9.00 per canister. _ __-_-- __-_ __- __- __ __- um um "W a) Assuming they treat repellant as a purely private good, how many units will each individual purchase? b) Suppose Abe is a hot shot biology major, and realizes that mosquito repellant is actually a pure public good. Intuitively he thinks that the three would be better off if they collectively purchased the repellant rather than individually buying repellant. Assuming that Abe is correct and repellant is a pure public good, what is the socially optimal number of repellant canisters for this three person collectivity? In the aggregate, is more or less repellant purchased after collective provision? How should the collective level of production be financed, assuming the group does not want to run a deficit
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