Table 11-6 Consider the city of Widgetapolis with only four residents, John, Jam
ID: 1163235 • Letter: T
Question
Table 11-6 Consider the city of Widgetapolis with only four residents, John, James, Mary, and Lydia The four residents ane trying to determine how many hours to spend in cleaning up the public lake. The table below shows ench resident's willingness to pey for each hour of cleaning Hours John James Mary Lydia $10 $50 Refer to Table 11-6. Suppose the cost to clean the lake is $40 per hour and that the residents have sgreed to spli the cost of cleaning the lake eqlly If was decided that the lake will be chesed fo the umber of hours the maximizes total surplus of Widgetapolis, how much individual surplus will James receive in total $20 b.-510 ?c.so d.5100Explanation / Answer
Consider the given problem here there are four different individuals having different willingness to pay for cleaning public lake. Now, the cost of cleaning the lake is “$40” per hour. If it is equally divided by the four individuals, => individually they will pay “10”.
So, for the 1st unit “James” want to pay “50”, => surplus is “50-10=40”. Similarly for the 2nd, 3rd, 4th and 5th the corresponding surplus are given by “30”, “20”, “10” and “0” respectively. So, here the “total surplus” is “40+30+20+10+0=100”. Now, “James” will not pay any amount for the “6th” and “7th” units because the value is less than the benefit.
So, here the correct answer is “d”.
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