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Don't copy from any other sources and write three questions with clear explanation The government of Khatmal is ooncemed that there is a market failure
Don't copy from any other sources and write three questions with clear explanation
The government of Khatmal is ooncemed that there is a market failure in the provision of road cleaning services and is considering a public provision option nanced by taxes on R and P. However, the tax collector is unable to distinguish between R and P as it is each for R to disguise as P. Hence, the government is restricted to taxing everyone the same amount to nance the cleaning. I.e., if m units of cleaning are provided, everyone is charged m/Z In taxes. c. What amount of daily cleaning should the government provide to maximize social surplus (assume the government maximizesthe sum of the utilities of R and P)? What would be the resulting utility of it and P under this level of provision? Discuss any differences from the utilities in part b above, and also comment on any changes in social surplus. d. Does the sum of the individuals' marginal rates of substitution equal the price ratio? Why do you think? pose that it is possible to distinguish between it and P, Now how much of or does the government provide, and how is marginal rates of substitution, and compare thus allowing differential e. Now sup the tax burden taxation. divided? Calculate the sum of the Individuals' urplus. with part d above. Also calculate resulting individual and social 5Step by Step Solution
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