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Welfare Economics and Removing Litter

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A company has 10 employees, all of whom desire a more pleasant work environment. Accordingly, they are considering removing litter from the grounds of the plant. Each employee has an inverse demand for "clean grounds" of P=100-2Q, where Q is the number of empty soda cans removed from the premise. The marginal cost of removing beer cans is $1 per can. What is the socially efficient quantity of cans to remove?

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Solution Summary

Solution depicts the methodology to calculate socially efficient quantity of cans to remove.

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P=100-2Q

Total Benefit=RB=P*Q=(100-2Q)*Q=100-2Q^2
Marginal ...

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
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