Please help me answer these question. Thank you (: Consider the following social
ID: 1097982 • Letter: P
Question
Please help me answer these question. Thank you (:
Consider the following social welfare function for a small community of five people.
where:
N= noncompetitive goods
C = competitive goods
P= pollution
a,b,c,d,e = people
|a= all people besides a
____________________________________________________
4. Will social welfare increase if Ms.b builds her mansion?
Please help me answer these question. Thank you (: Consider the following social welfare function for a small community of five people. where: N= noncompetitive goods C = competitive goods P= pollution a,b,c,d,e = people |a= all people besides a ____________________________________________________ In this problem, is a new mansion and let P be the enviornmental costs of building the mansion. Then let be the status impact on folks who are not Ms.b arising from the new mansion. Assume that the positive increment to individual utility for Ms.b of a one-unit increase in equals $10,000 in consumer surplus and that the negative status increment to other people is -$2,000. Assume also that a one-unit increase in produces one unit of P, which decreases everyone's consumer surplus by $500. 1. What are the private benefits to Ms.b of consuming one more unit of ? 2. What are the enviornmental costs to Ms.b consuming one more unit of ? 3. What are the status costs to others to Ms.b consuming one more unit of ? 4. Will social welfare increase if Ms.b builds her mansion?Explanation / Answer
1. Private benefit = $10,000 = $10,000
2. Environmental cost to Ms. B = $500
3. Status costs to others = 4*($2,000 + $500) = $10,000
4. Increase in social welfare = Private benefit to B - Environmental cost to B - Status Costs to others = -$500
Thus, there is a decrease in social welfare due to the mansion
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.