Midterm 1 solutions

# What is the total social benefit of the 5 units of q

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Unformatted text preview: otal social benefit of the 5 units of Q? Total cost of providing 5 units is the area under marginal cost out to Q=5. On the graph, this area is the triangle B+C+D: TC=1/2*(5*10) =\$25 Total benefit is the area under the SMB curve, again out to Q=5. This is A+B+C on the graph: TB=8*5=\$40 While the question did not ask for net benefits, those would be TB - TC = 40 - 25 = 15. On the graph, this is area A - D. 3. (6 points) Suppose you are analyzing legislation to protect sea turtles in Hawaii and would like to construct an economic measure of the benefits from each sea turtle saved. a. (3 points) In a sentence each, describe the two main ways that economists might use to measure these environmental benefits in dollar terms. A variety of an...
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## This note was uploaded on 01/31/2014 for the course BILD 3 taught by Professor Wills during the Winter '07 term at UCSD.

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