Question
Suppose certain fireworks are legal in a residential area on Canada Day. The fireworks have been approved for safety, but they do cause noise pollution
Suppose certain fireworks are legal in a residential area on Canada Day. The fireworks have been approved for safety, but they do cause noise pollution so their use must be limited. Jenny and Salo like to purchase fireworks for their families; the table below shows the net marginal benefit that Jenny and Salo gain from each firework they purchase.
Net marginal benefit | Q Jenny | Q Salo |
10 | 0 | 0 |
9 | 10 | 5 |
8 | 20 | 10 |
7 | 30 | 15 |
6 | 40 | 20 |
5 | 50 | 25 |
4 | 60 | 30 |
3 | 70 | 35 |
2 | 80 | 40 |
1 | 90 | 45 |
0 | 100 | 50 |
Instructions: Enter your answers as whole numbers. a. If a quota of 30 fireworks per person is imposed, the marginal benefit of the last firework for Jenny is $ . The marginal benefit of the last firework for Salo is $ . b. In order to reduce the combined purchases of both Jenny and Salo to 60 fireworks, a tax of $ should be imposed. Under this tax, Jenny will purchase fireworks and Salo will purchase fireworks. c. With the tax, the net marginal benefit of the last firework for Jenny is $ and for Salo $ .
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started