Thursday, December 13, 2007

Mosquito Control


I have a question about "Problem Set 10 - 1. Public Goods (Mosquito
When I see (d), the answer says that the total benefit ro Adam and Beth is $16,667 and $33,334 respectively, but I don't understand this part. It is not the exact area under their respective marginal benefit curve - we have to calculate the trapezoid area like the followings -> 0.5 * (400 + about 60) * 166.67 for Beth.


I think you are right. The answer in the solution would give a triangle that assumes the people would be paying a positive price for the good, when in the context of the problem they are getting it at a price of zero.

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