a.) Arthur’s demand to reduce electric and magnetic fields (EMFs) is P = 20 – 2 Q, while Ronald’s demand is P = 15 – 3 Q. If the marginal cost of reducing emissions is equal to $15 and is constant, what is the optimal amount of EMF reduction? b.) What Lindahl prices would you charge Arthur and Ronald? What might prevent you from collecting these prices? c.) How would your answers change if the marginal cost of reducing emissions was equal to $10 and is constant?

a.) Arthur’s demand to reduce electric and magnetic fields (EMFs) is P = 20 – 2 Q, while Ronald’s demand is P = 15 – 3 Q. If the marginal cost of reducing emissions is equal to $15 and is constant, what is the optimal amount of EMF reduction? b.) What Lindahl prices would you charge Arthur and Ronald? What might prevent you from collecting these prices? c.) How would your answers change if the marginal cost of reducing emissions was equal to $10 and is constant?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.9P

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