53.The 100 residents in a small town live in fear of contracting mosquito-borne diseases. A consultant has advised that the most effective method of keeping the mosquito population in check is by aerial spraying of the appropriate insecticide over the whole town. Following table shows thetotal cost of conducting a given number of aerial sprays each year and the marginal benefit derived by each resident from an extra aerial spray.

Number of sprays per year	Total cost ($ per year)	Marginal cost ($ per spray)	Marginal benefit to each resident ($ per spray)	Marginal benefit to the town ($ per spray)
0	0
1	200		12
2	400		6
3	600		3
4	800		1
5	1000		0

a) How many aerial sprays will be conducted if each resident has to act independently of the others?

b) What is the efficient level of provisions of aerial sprays? What is the town's net benefit from such a level of provision?

c) How can the town finance the efficient number of aerial sprays? Will voluntary contributions raise the necessary amount?

2. Geraldine wanted a compensation for risk bearing of $8,000 in order to run a tuition centre. Geraldine pays the rent of $4,000 a year, and her total revenue is $18,000 a year. She has also sacrificed $4,000 a year rental income she could have earned by renting her own building to someone else. She borrowed $1,000 at 10 per cent a year to buy tuition centre furniture. Depreciation costs were negligible. Calculate Geraldine's annual implicit cost, explicit costeconomic profit