The New York state government is trying to build a massive dam that may obscure scenic views of the Hudson River. Assume the state government is trying to decide how many miles of the river it should preserve. The community that would be affected includes 200 people, each of whom has an identical inverse demand function represented by P= 30-3q, where q is the number of miles preserved and P is the per-mile price the community member is willing to pay for q miles of preserved river a. If the marginal cost of preservation is $600 per mile, how many miles would be preserved in an efficient allocation? b. What is the size of the economic surplus?

The New York state government is trying to build a massive dam that may obscure scenic views of the Hudson River. Assume the state government is trying to decide how many miles of the river it should preserve. The community that would be affected includes 200 people, each of whom has an identical inverse demand function represented by P= 30-3q, where q is the number of miles preserved and P is the per-mile price the community member is willing to pay for q miles of preserved river a. If the marginal cost of preservation is $600 per mile, how many miles would be preserved in an efficient allocation? b. What is the size of the economic surplus?

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter5: Supply, Demand, And Price: Applications

Section5.7: Application 7: Why Do Colleges Use Gpa,s Actss, And Sats, For Purposes Of Admission?

Problem 2ST

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