If the government sets a production quota on the total amount of water such that the spring

Question:

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.

TABLE 2 Quantity of water (gallons per day) 10 20 30 40 50 60 70 Marginal Marginal social external cost

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  answer-question

Foundations Of Economics

ISBN: 9780134486819

8th Edition

Authors: Robin Bade, Michael Parkin

Question Posted: