Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please help me .. someone answered in a wrong way.. please answered this question who know in a right way... (Public Good) Two residents develop

please help me .. someone answered in a wrong way.. please answered this question who know in a right way... (Public Good) Two residents develop their communal area into a community garden. The marginal benefit of each resident i = 1, 2 from the garden is given by MB1 = 100 Q and MB2 = 60 Q, where Q is the size of the garden in m2 . The cost of developing the communal area into a garden is C(Q) = 50Q. Assume that the community garden is non-rivalry and non-excludable. 1) Calculate the total marginal benefit from the garden as a function of Q. What is the optimal size of garden. What is the benefit of the garden to each resident? 2) Suppose the residents independently and simultaneously develop the garden at their own cost. To be specific, each resident i = 1, 2 develops qi at the cost of Ci(qi) = 50qi and the size of the community garden is jointly determined by Q = q1 + q2. What is the size of the garden developed by each resident in equilibrium? What is the payoff to each individual. (Hint: Find the best response function BRi(qj ) of each resident i against the opponent js choice of qj to derive the Nash equilibrium.) 3) Now suppose residents develop their own private walled-garden, which is excludable. What will be the size of private garden developed by each resident? What will be their payoff?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Core Concepts Of Accounting Information Systems

Authors: Nancy A. Bagranoff, Mark G. Simkin, Carolyn Strand Norman

11th Edition

9780470507025, 0470507020

More Books

Students also viewed these Accounting questions

Question

List one of the facultys publications in APA style.

Answered: 1 week ago

Question

What is management growth? What are its factors

Answered: 1 week ago

Question

Content Answered: 1 week ago

Answered: 1 week ago