TherearetwotypesofresidentsinNdolaand Kitwe,professorsandstudents. Professorshaveanincomeof Y =200;studentshaveanincomeof Y =100.BothNdolaand Kitweprovideroadrepairservicesfortheircitizens.Professorsvalue roadrepairmorethanstudentsbecausetheyhavenicercars.Infact,thevalueof roadrepairtoeachindividualtakestheform( Y R )/10- R 2/2.The per-resident costofroadrepairis5
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Question:
TherearetwotypesofresidentsinNdolaand Kitwe,professorsandstudents.
ProfessorshaveanincomeofY=200;studentshaveanincomeofY=100.BothNdolaand Kitweprovideroadrepairservicesfortheircitizens.Professorsvalue roadrepairmorethanstudentsbecausetheyhavenicercars.Infact,thevalueof roadrepairtoeachindividualtakestheform(Y R)/10-R2/2.Theper-residentcostofroadrepairis5R.
- Whatisthemarginalvalueofroadrepairforeachtypeofindividual?Whatisthe marginalcosttoeachtypeofindividual? [10 Marks]
- How muchdoprofessorswanttospendonroadrepair?Howmuchdostudents wanttospend? [10 Marks]
- Assumethatresidentsaredistributedasfollows:
Ndola | Kitwen | |
Professors | 50 | 25 |
Students | 25 | 50 |
Ifeachtownusesmajorityvotingtodeterminehowmuchroadrepairtoprovide,howmuchwilleachtownprovide?Areanyresidentsunsatisfiedwiththeamountof road repair? [5 Marks]
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