Suppose the Coca-Cola company with the US$7.351 billion annual net income (2015)
ID: 1140697 • Letter: S
Question
Suppose the Coca-Cola company with the US$7.351 billion annual net income (2015) is going to project its logo during the full moon for a year. They estimate the increase in income from advertising of $10 million per each full moon day of the logo projection (there are 36 full moon days a year). This makes the supply of clear Moon from Coca-Cola: P $10,000,000 per day for up to 36 days/year. Also, suppose there are 1 million people worldwide who enjoy seeing full moon clear of logos. That makes the clear Moon a Public Good Each of these 1 million people have an individual marginal Willingness to Pay (demand) for logo-free moon days per year: Individual WTP/year $36- g where q is the logo-free full moon days enjoyed. Suppose these people are forming a coalition with a representative body to offer Coca-Cola a payment for not showing up on the Moon. ere is no free-riding among them, how many days would they purchase from Coca-Cola? a. 0 b. 13 c. 26 d. 36 e. Cannot tell 34. How many if everyone is planning to free ride? b. 13 c. 26 d. 36 e. Cannot tellExplanation / Answer
Answer:
33. If there is no free-riding among them, how many days would they purchase from coca-cola:
Answer: c.26
Explanation:
As given; 1 million people are willing to pay
$10 million is one day estimated income of coca-cola
That means individual is willing to pay = $10million / 1million
= $10,000,000/ 1,000,000
= $10
So willingness to pay for a person is $10
WTP/year = $36 – q
q= day enjoyed or purchased by people from coca-cola
$10 = $36 –q
q= 36-10
q= 26
So, the days purchased by them will be 26
34. How many if everyone is planning to free ride:
Answer: a.0
if everyone is planning to free ride then their willingness to pay for a day will be zero and they will not purchase any day.
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