AEM_250_Homework4_Fall_2008

AEM_250_Homework4_Fall_2008 - AEM 250 Environmental and...

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AEM 250: Environmental and Resource Economics Homework 4 – Market Failure (Public Goods) Distributed: Oct. 9, 2008, due in AEM 250 Red Box outside of Warren 104 by 9:30 A.M. on Oct. 17, 2008 PLEASE KEEP A COPY OF YOUR ANSWERS AS WE WILL NOT BE ABLE TO GRADE THEMN PRIOR TO THE FIRST IN-TERM EXAM (Oct. 21). THE ANSWERS WILL BE POSTED ON THE MORNING OF OCT. 17 SO THAT YOU CAN CHECK YOUR ANSWERS 10 Points. All graphs should be clearly labeled and all other work legible. If we are unable to interpret your work, you will receive a lower score. 1. (Hint see gobbet 10) Suppose that Portage County Wisconsin’s ground water was contaminated with nitrates, and that two consumers (C1 and C2) live in this famed “sand county”. Below are their individual marginal willingness to pay functions (also known as marginal benefit functions) for a public de-nitrification plant where WTP indicates marginal willingness to pay for each additional unit of treatment and T indicates the level of treatment. Treatment is such that higher levels of treatment increase the purity of water. WTP
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AEM_250_Homework4_Fall_2008 - AEM 250 Environmental and...

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