Question-In Parkland County there are three residents: ANDREW, BETH, CATHY. They exercise different amounts and have different marginal benefits for any given size of public park. The marginal benefits for each person are: MBA (A) =6-A/4; MBB (A) =14-A; MBC (A)=15-3A, where subscripts denote each person. The marginal cost of A acres of park is 18.Suppose the county government informs the voters that for each unit of A, each person will pay a tax of $6. What would be each person's preferred size of A? What would be the size of A that would result from voting?Suppose that the government of Parkland decides that it wants to provide the efficient size of park. Further suppose that the government decides it is now willing to charge different people a different tax to meet this goal. What would be the size of A ? How much will the government charge each person?

Answered: Parkland County there are three…

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter17: Making Decisions With Uncertainty

Section: Chapter Questions

Problem 17.6IP

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In Parkland County there are three residents: ANDREW, BETH, CATHY. They exercise different amounts and have different marginal benefits for any given size of public park. The marginal benefits for each person are: MB_A (A) =6-A/4; MB_B (A) =14-A; MB_C (A)=15-3A, where subscripts denote each person. The marginal cost of A acres of park is 18.

Suppose the county government informs the voters that for each unit of A, each person will pay a tax of $6. What would be each person's preferred size of A? What would be the size of A that would result from voting?
Suppose that the government of Parkland decides that it wants to provide the efficient size of park. Further suppose that the government decides it is now willing to charge different people a different tax to meet this goal. What would be the size of A ? How much will the government charge each person?

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