Consider an economy with three types of individuals, differing only with respect to their preferences for dikes. Individuals of thefirst type get a fixed benefit of 250 from the mere existence of dikes, whatever their number. Individuals of the second type getbenefits of BI1 = 300 + 90D – 4D where D denotes the number of dikes in the city. Individuals of the third type get benefitsaccording to BIII = 30D – 2D² for D < 2, but Br11 = 100+30D – 2D² for D > 2. Assume that there are 50 people ofeach type. Dikes cost $3, 000 each to build. How many dikes should be built?

Name: Consider an economy with three types of individuals, differing only w
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Description: Consider an economy with three types of individuals, differing only with respect to their preferences for dikes. Individuals of thefirst type get a fixed benefit of 250 from the mere existence of dikes, whatever their number. Individuals of the seco

Utility of individual BI=250 Utility of individual BII=300+90D-4D2 Utility of individual…

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Consider an economy with three types of individuals, differing only with respect to their preferences for dikes. Individuals of the first type get a fixed benefit of 250 from the mere existence of dikes, whatever their number. Individuals of the second type get benefits of B11 = 300 + 90D – 4D² where D denotes the number of dikes in the city. Individuals of the third type get benefits according to Br11 = 30D – 2D² for D < 2, but B1¡1 = 100 + 30D – 2D² for D 2. Assume that there are 50 people of each type. Dikes cost $3, 000 each to build. How many dikes should be built? %3D