There are 9 people with the following marginal willingness to pay schedules for levels of environmental quantity Q: Two people with the same marginal WTP=$20-Q. Three people with the same marginal WTP= $10-Q. Four people with the same marginal WTP= $5-0.5Q. The marginal cost is given by MC=3+3Q. Use both graphic and algebraic techniques to show the aggregate marginal WTP. What is the socially optimal level of Q and the level of voluntarily provision of Q? Under Lindahl pricing, what personalized tax share price would each one pay?

There are 9 people with the following marginal willingness to pay schedules for levels of environmental quantity Q: Two people with the same marginal WTP=$20-Q. Three people with the same marginal WTP= $10-Q. Four people with the same marginal WTP= $5-0.5Q. The marginal cost is given by MC=3+3Q. Use both graphic and algebraic techniques to show the aggregate marginal WTP. What is the socially optimal level of Q and the level of voluntarily provision of Q? Under Lindahl pricing, what personalized tax share price would each one pay?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.6P

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