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Econ 115_2020_PS10.pdf - Adobe Acrobat Pro 2020 0 X File Edit View Window Help Home Tools Econ 115_2020_PS1... x 2020 Pset 10.pdf ? Sign In
Econ 115_2020_PS10.pdf - Adobe Acrobat Pro 2020 0 X File Edit View Window Help Home Tools Econ 115_2020_PS1... x 2020 Pset 10.pdf ? Sign In 2 / 3 4. A medieval village is considering building a wall to protect itself from violent bandits. If built, the wall will protect all the villagers equally. The degree of protection depends on the height, H, of the wall. H is measured in feet. The total cost of the wall, measured in gold coins, is 60H. In the village there are 200 artisans, each of whom has an identical marginal utility (also measured in gold coins) for the height of the wall. This marginal utility is given by MUA(H) = 1 - There is also one Duke, whose marginal utility, again in coins, is given by MUP(H) = 100 - 5H. Assume that all of the residents (artisans and Duke) are perfectly selfish. (a) If the decision on how heigh to build the wall is left to private individual decision-making, how tall will the wall be? Who will pay? 2 v - + 123% 70OF Search 7:23 PM Sunny L S 5/4/2023 DEcon 115_2020_PS10.pdf - Adobe Acrobat Pro 2020 0 X File Edit View Window Help Home Tools Econ 115_2020_PS1... X 2020 Pset 10.pdf ? Sign In X 3 /3 (b) What wall height would maximize the total social surplus of the village? (c) Now suppose that the Duke doesn't want to pay for the wall at all. He will let the artisans vote on how high the wall will be. If the artisans pick a wall of height H, each of them will have to pay their per-capita share of the cost, which is OH. What H will the v artisans agree on? 70OF Search S 7:23 PM Sunny 5/4/2023 D
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