Consider an air basin with only two consumers, Huck and Matilda. Suppose Huck's demand for air quality is given by qH1-p where p is Huck's marginal willingness to pay for air quality. Similarly, Matilda's demand is given by 9M-2-2p. Air quality can be supplied according to g = p where p is the marginal cost of supply. a. b. Graph the aggregate demand for air quality along with individual demands. What is the efficient amount of air quality? 4/5

Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter5: Difficult Cases For The Market And The Role Of Government
Section: Chapter Questions
Problem 10CQ
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Consider an air basin with only two consumers, Huck and Matilda. Suppose Huck's
demand for air quality is given by q1 - p where p is Huck's marginal willingness
to pay for air quality. Similarly, Matilda's demand is given by 9M-2-2p. Air quality
can be supplied according to q = p where p is the marginal cost of supply.
a. Graph the aggregate demand for air quality along with individual demands.
b. What is the efficient amount of air quality? 4/5
Transcribed Image Text:Consider an air basin with only two consumers, Huck and Matilda. Suppose Huck's demand for air quality is given by q1 - p where p is Huck's marginal willingness to pay for air quality. Similarly, Matilda's demand is given by 9M-2-2p. Air quality can be supplied according to q = p where p is the marginal cost of supply. a. Graph the aggregate demand for air quality along with individual demands. b. What is the efficient amount of air quality? 4/5
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