5. Suppose that there is a village having 1000 people. There is one public good, the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
5. Suppose that there is a village having 1000 people. There is one public good, the irrigation facilities. Villagers have the same utility function u(x,,G)=x-100/G, where x is a numeraire good, measured by the money spent on private consumption and G is the scale of the irrigation facilities. The price of the irrigation facilities is 10 yuan per unit. Every villager has an income of 1,000 yuan per year. (a) Write down an expression for the absolute value of the marginal rate of substitution between private consumption and the public good. (b) What is the marginal cost of producing the irrigation facilities? (c) Write down the condition for a Pareto efficient supply of good G and solve for the Pareto efficient amount. (d) Suppose that everyone in the village pays an equal share of the cost of the public good. When individual decides his demand for the public good and private consumption, what is the budget constraint of each villager? (e) What is the individual optimal demand for the public good G ? Will it be larger than, smaller than, or the same size as the Pareto optimal amount? 5. Suppose that there is a village having 1000 people. There is one public good, the irrigation facilities. Villagers have the same utility function u(x,,G)=x-100/G, where x is a numeraire good, measured by the money spent on private consumption and G is the scale of the irrigation facilities. The price of the irrigation facilities is 10 yuan per unit. Every villager has an income of 1,000 yuan per year. (a) Write down an expression for the absolute value of the marginal rate of substitution between private consumption and the public good. (b) What is the marginal cost of producing the irrigation facilities? (c) Write down the condition for a Pareto efficient supply of good G and solve for the Pareto efficient amount. (d) Suppose that everyone in the village pays an equal share of the cost of the public good. When individual decides his demand for the public good and private consumption, what is the budget constraint of each villager? (e) What is the individual optimal demand for the public good G ? Will it be larger than, smaller than, or the same size as the Pareto optimal amount?
Expert Answer:
Answer rating: 100% (QA)
UX G X S Price of G 10 Yuan unit M Income of each Villager 10... View the full answer
Related Book For
Managerial Decision Modeling with Spreadsheets
ISBN: 978-0136115830
3rd edition
Authors: Nagraj Balakrishnan, Barry Render, Jr. Ralph M. Stair
Posted Date:
Students also viewed these accounting questions
-
A souvenir retailer has an opportunity to establish a new location inside a large airport. The annual returns will depend primarily on the size of the space she rents and if the economy will be...
-
In an unrelated analysis, you have the opportunity to choose between the following two mutually exclusive projects: The projects provide a necessary service, so whichever one is selected is expected...
-
In an unrelated analysis, you have the opportunity to choose between the following two mutually exclusive projects: The projects provide a necessary service, so whichever one is selected is expected...
-
A stream of particles of one size are 80% converted (SCMIash diffusion control, uniform gas environment) on passing through a reactor. If the reactor is made twice the size but with the same gas...
-
As a group, spend 5 or 10 minutes generating ideas about the alternative restaurants that the members think will be most likely to succeed. Each group member should be as innovative and creative as...
-
Assess the development challenges facing African and Middle Eastern countries.
-
Liberty's stock has traded recently around \(\$ 44\) per share. Use your answer to question 9 to measure the company's price/earnings ratio. a. 36 b. 44 c. 1.00 d. 69
-
Use the ending balances from Problem 10- 27 to prepare a balance sheet.
-
Problem 5. SAVE and PREVIEW ONLY SAVE and PREVIEW ONLY -- ANSWERS NOT SUBM (1 point) Get help entering answers A car whose position, s, is given by the following table: t(sec) 0 0.2 0.4 0.4 0.6 0.6...
-
In each row of the file named Problem24data.xlsx, you will find a citys zip code, city name, state (always Texas!), latitude, and longitude. Use formulas to extract the name of the city in each row....
-
Casey deposited $800 at the end of every month into an RRSP for 9 years. The interest rate earned was 4.75% compounded semi-annually for the first 3 years and changed to 5.00% compounded monthly for...
-
1. A point on the third nodal line from the center of an interference pattern is 35 cm from one source and 42 cm from the second source. The sources are 11.2 cm apart and vibrate in phase at 10.5 Hz....
-
For years, Dell's seemingly magical power to squeeze efficiencies out of its supply chain and drive down costs made it a darling of the financial markets. Now we learn that the magic was at least...
-
37. Given the line: y=x-2 a. Find the parallel slope b. Find the perpendicular slope 38. Determine if the lines are parallel or perpendicular: a. -2x+5y=9 and 5x+2y=-6 b. 4y =8x+12 and -12x+6y=24 39....
-
3. McClain, Edwards, Shiver, and Smith (MESS) LLC is considering the purchase of new automated cleaning equipment. The industrial engineer for the company, David "the Dirtman" R., has been asked to...
-
You have learned about social media, the Internet, and blogging. You have also created your own blog. In this activity, you will introduce a blog owner (a company, organization, or school). You'll...
-
2. Suppose there are 2 items in stock at the beginning of the day. Assume that the inventory will not be replenished during the day and that there are no backorders. Suppose the demand D during the...
-
Horse serum containing specific antibody to snake venom has been a successful approach to treating snakebite in humans. How do you think this anti-venom could be generated? What are some advantages...
-
If Valdez wants to ensure that his customers wait an average of around 10 minutes, what should be his average service time? Assume that the standard deviation of service time remains at 15 minutes.
-
Why is it important to have an iterative process between the steps of the decision modeling approach?
-
The Greenville Ride have $19 million available to sign free agent pitchers for the next season. The following table provides the relevant information for eight pitchers who are available for signing,...
-
What are the responsibilities of the governments toward the stateless? Do the United States and other powerful nations have responsibilities toward groups such as the Rohingya? Following the...
-
The United States and Canada are two of only 33 countries that have jus soli, the right to citizenship of any individual born on their soil. Why do you think this right is so limited, and do you...
-
What are stratified societies and what kinds of social systems are they identified with?
Study smarter with the SolutionInn App