This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: Name____________________________ Section (circle one) 9:30 OR 11:00 Econ 319, Homework 2 due Feb 7. 1. (This is a modified version of problem #2 in Chapter 4 of your text). Four towns share a common water source. By buying open land along the watershed, the towns can preserve the purity of the water. The demand schedule for each town is given by P=$34,000-10*Q, where Q is the number of acres of land purchased and p is the price the town is willing to pay. a. Suppose the cost of land is $30,000 per acre. How much land would each town wish to purchase if acting independently? b. What kind of good (private, public, collective, commons) is the watershed? Think in terms of the benefits the watershed provides. Explain. c. What is the socially efficient amount of land that should be purchased? Draw the individual and aggregate curves on the graph and label the individual and social optimums. 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 90,000 100,000 110,000 120,000 130,000 140,000 150,000 200 400 600 800 1000 1200 1400 1600 1800 2000 2200 2400 2600 2800 3000 3200 3400 # of acres Price per acre d.d....
View Full Document
This note was uploaded on 04/08/2008 for the course ECON 32990 taught by Professor Smith during the Spring '08 term at Western Michigan.
- Spring '08