Q Search in Document Home Insert Design Layout References Mailings Review View S
ID: 1104082 • Letter: Q
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Q Search in Document Home Insert Design Layout References Mailings Review View Share Times AaBbCcDdEe AaBbCDdEe AaBbCcDc AaBbCcDdE Heading 2 Heading 1 Refer to below scenario and table to answer rest of the questions (I point each). agreed to split all tree- planting costs equally. How many trees would Andrew prefer to plant? There are four homes along Minnetrista, which surrounds a small plot of land. The land currently has no trees, and the 4 homeowners- Andrew Brady, Chase, and Davis are considering the idea of contributing to a pool of money that will be used to plant up to 4 trees. The table represents their willingness to pay, that is, the maximum amount that each homeowner is willing to contribute toward cach trec. i. Supposc the cost to plant cach tree is $220 and the 4 homcowners have agreed to split all tree- planting costs equally. Which homcowner(s) would be in favor of planting at least 3 trees? j. Suppose the cost to plant each tree is S340 and the 4 homeowners have agreed to split all tree- planting costs equally. Which homeowner(s) would be in favor of planting at least 1 treel? Brady Chase Davis First tree Second tree Third trec Fourth tree S100 S120 S90 110 80 40 S0 50 100 10 50 Hint: Find Total WTP of each tree to answer questions e and f. For the remaining guestions you need to divide the cost of the tree by four to get a per-person cost & compare to the individual WTP] e.Suppose the cost to plant each tree is S300. How many trees should be planted to maximize the total surplus of the four homeowners? f. Suppose the cost to plant each tree is S90. How many trees should be planted to maximize the total surplus of the four homeowners? 8 Suppose the cost to plant each tree is $380 and the 4 homeowners have agreed to split all tree-planting costs equally. Which homeowners) would be opposed to planting any trees? h. Suppose the cost to plant each tree is $120 and the 4 homeowners have Page 1 of 2 345 Words English (US) Focus 99%Explanation / Answer
Total willing to pay:
first tree = 100+115+120+90 =$420
second tree = 50+110+110+50 = $320
third tree = 20+100+80+30 = $230
fourth tree = 10+50+40+0 = $100
e) cost of plant of each tree = $300
total of 2 trees to be planted to maximise the total surplus of the four homeowners.
surplus = $140
f) cost of plant of each tree = $90
total of 4 trees to be planted to maximise the total surplus of the four homeowneres.
surplus = $720
g) cost to plant each tree = $380
if all splits equally then
cost per person = 380/4 = $95
Davis would oppose to planting any trees because his maximum willingness to pay for first tree is $90.
h) cost to plant each tree = $120
if all splits equally then
cost per person = 120/4 = $30
Adrew would prefer 2 trees to be planted because his WTP for the 3rd tree is $20 which is less than $30.
i) cost to plant each tree = $220
if all splits equally then
cost per person = 220/4 = $55
Brady and chase would agree to plant atleast 3 trees because their WTP for the 3rd tree is greater than $55.
j) cost to plant each tree = $340
if all splits equally then
cost per person = 340/4 = $85
Everyone would agree to plant atleast 1 tree because their WTP for the 1st tree is greater than $85.
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