Public Goods
Thelma and Louise are neighbors. During the winter, it is impossible for a snowplow to clear the street in front of Thelmaâ??s house without clearing the front of Louiseâ??s. Thelmaâ??s marginal benefit from snowplowing services is 12-Z, where Z is the number of times the street is plowed. Louiseâ??s marginal benefit is 8-2Z. The marginal cost of getting the street plowed is $16.

Sketch the two marginal benefit schedules and the aggregate marginal benefit schedule. Draw in the marginal cost schedule, and find the efficient level of provision for snowplowing services. If Thelma and Louise can come to an agreement that allows for the efficient level of provision of the snowplowing services, what are three possible ways in which they can share the costs? If Thelma and Louise cannot come to an agreement, how many times will the street be plowed?

Solution Preview

To find the amount that a group would pay for a public good, we sum their demand curves vertically. This is done because the good must be consumed in equal amounts, unlike a private good. Vertical summation of 12 -Z and 8-2Z gives us the MSB curve shown on the attached file. At $16, the MSC, we find that this curve is ...

Solution Summary

Efficient level of snowplowing determined by marginal costs and benefits

Which of the following relationships is correct?
a. When marginal product starts to decrease, marginalcost starts to decrease.
b. When marginalcost starts to increase, average cost starts to increase.
c. When marginalcost starts to increase, average variable cost starts to increase.
d. When margina

52. The Jones Company has the following cost schedule:
Output Total Cost
(Units) ($)
0 3000
50 3750
100 4275
150 4675
200 5000
250 5300
300 5700
350 6250
400 7050
450 8225
Prepare (a) average total costand (b) marginalcost schedules for the firm.

The cost function for a business is shown in the table below (where Q is the level of output):
Q (units) Cost
0 8
1 24
2 38
3 44
4 51
5 52
6 59
7 65
8 79
9 95
10 125
Calculate the (a) marginalcostand (b) the average total cost schedules.

1. Given the following total cost function of C (q) = 400Q(squared) - 20Q + 7
Calculate Average cost, Marginalcost, Average Variable Costand the output level at which Average Variable Cost is at a minimum.

MarginalCost & Marginal Benefit
1. How can I cite three examples of personal decisions, in which I weighed:
a. marginalcost
b. marginal benefit.
(Make sure these are socially acceptable).

1-The only choice variable is x. The total benefit function is B(x) = 100x - 2x2, and the total cost function is C(x) = 1/3 x3 - 6x2 + 52x + 80.
a-What are the marginal benefit andmarginalcost functions?
b-Set up the net benefit function and then determine the level of x that maximizes net benefit. (Use the positive value

Construct line charts for the Average Cost (AC), Average Variable Cost (AVC), MarginalCost (MC), Marginal Revenue (MR) and Average Revenue (AR) on a Cartesian coordinate system.

If marginalcost exceeds marginal revenue, then:
a. the firm ends up with a net loss
b. the firm's average osts exceed average benefits
c. the firm should decrease its production level
d. none of the statements associated with this question are correct