$ 4 10 1 10 Q Assume that bottled water and local well water are perfect substitutes for drinking purposes. The bottled water, however, is considerably more expensive – $3.00 versus $1.00 per gallon. Assume that a toxic pollutant has contaminated the local well water. Assume there are no other uses for the well water beyond drinking purposes and that the community's aggregate inverse demand for drinking water is: P = 10 - Q where Pis the price of drinking water and Q is gallons of water (in millions). Using the information calculated in previous questions, what is the community's willingness to pay to clean up the well? Please show the calculations you use to arrive at your answer. 3.

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter12: The Partial Equilibrium Competitive Model
Section: Chapter Questions
Problem 12.11P
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10
Q
Assume that bottled water and local well water are perfect substitutes for drinking
purposes. The bottled water, however, is considerably more expensive – $3.00 versus
$1.00 per gallon. Assume that a toxic pollutant has contaminated the local well water.
Assume there are no other uses for the well water beyond drinking purposes and that the
community's aggregate inverse demand for drinking water is: P = 10 – Q where Pis the
price of drinking water and Q is gallons of water (in millions).
Using the information calculated in previous questions, what is the community's willingness
to pay to clean up the well? Please show the calculations you use to arrive at your answer.
%24
Transcribed Image Text:10 3 1 10 Q Assume that bottled water and local well water are perfect substitutes for drinking purposes. The bottled water, however, is considerably more expensive – $3.00 versus $1.00 per gallon. Assume that a toxic pollutant has contaminated the local well water. Assume there are no other uses for the well water beyond drinking purposes and that the community's aggregate inverse demand for drinking water is: P = 10 – Q where Pis the price of drinking water and Q is gallons of water (in millions). Using the information calculated in previous questions, what is the community's willingness to pay to clean up the well? Please show the calculations you use to arrive at your answer. %24
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