Following are portions of the demand curves of three individuals for the water quality in a small pond. The water quality is expressed in terms of the parts per million (ppm) of dissolved oxygen (DO). Water quality improves at higher DO levels. The demand curves show the marginal willingness to pay of each individual (A, B, C).
a. Complete the table. Find the aggregate marginal willingness-to-pay curve of these three people at each DO level.
b. If the actual marginal cost of increasing DO is $12, what is the socially efficient level of DO in the lake, assuming these three people are the only ones involved?

Transcribed Image Text:

DO Level (ppm) 0 1 3 4 5 6 A $10 6 4 ON A 2 Marginal WTP B $10 8 6 4 2 0 0 с $12 10 8 6 4 2 0 Aggregate MWTP