Problem_Set_2-Spring2014_SOLN

P 1500 a what is the efficient height of the flagpole

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Unformatted text preview: eet. P 1500 A) What is the efficient height of the flagpole? Efficient is the social optimum which occurs where SMB = MC: SMB: P = 1500 – 100Q, MC: P = 10 10 = 1500 – 100Q Q = 14.9 FEET high SMB 15 10 MB B) Would you expect the individuals to voluntarily provide a flagpole at the efficient height? Briefly explain and quantify why or why not. MC Q 15 Because of free-riders the voluntary provision will far too low! At most, neighbors will provide where marginal cost equals private marginal benefit: MC = MB which give Q = 5 FEET high 4) A Common Pool Resource Two Scandinavian settlers encounter a buffalo herd when settling in the America...
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This document was uploaded on 03/11/2014 for the course ECON 328 at Wisconsin Milwaukee.

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