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A city mayor wants to increase number of trees in the public area. Number of city populaton is 15. Marginal cost to plant a
A city mayor wants to increase number of trees in the public area. Number of city populaton is 15. Marginal cost to plant a tree is $25. Marginal beneft function for 5 people is 100 - 5Q, and for the other 10 people is 50 2.5Q, where Q is a number of trees planted in that city public area. a. Draw each Marginal Benefit (MB) and Marginal Cost (MC) curve in diagram. What is the maximum number of trees could be planted if the city population do not share their cost? What strategy should be taken by the city population when they are not sharing the plantation cost and there is no trees planted in public area? Would it be possible that the city population will not plant the tree at all? (7 points). b. Draw Marginal Social Benefit curve. Calculate number of trees planted at the social optimality level (7 points). c. If the number of population is increasing linearly, what will be happened in question (a) above? (4 points) d. Is it possible to use Coase approach, is it possible that the city population reach consencus on output efficiency at the initial condition? (4 points) e. Same with question (d): what if the number of city population becomes 100 thousand? (3 points)
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a To draw the MC and MB curves we need to first calculate the total MB for each group of people based on the given marginal benefit functions For the first 5 people MB 100 5Q For the remaining 10 peop...Get Instant Access to Expert-Tailored Solutions
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Step: 3
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