If the government sets a production quota on the total amount of water such that the spring
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If the government sets a production quota on the total amount of water such that the spring is used efficiently, what would that quota be?
A natural spring runs under land owned by ten people. Each person has the right to sink a well and can take water from the spring at a constant marginal cost of $5 a gallon. Table 2 sets out the marginal external cost and the marginal social benefit from the water.
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