2. A significant new source of water in the form of two aquifers was recently discovered...

  

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2. A significant new source of water in the form of two aquifers was recently discovered in the dry northern region of Turkana in Kenya, East Africa where a significant population lacks access to safe water. As background information, the aquifers contain nearly 250 billion cubic meters of water (66 trillion gallons) and are recharged at a rate of 3.4 billion cubic meters (898 billion gallons) each year. The recharge rate is how much water goes back into the aquifer from rainfall, seepage from rivers, and other natural sources, and is about the amount of water consumed annually in Austria. The aquifers represent an open access resource (common property resource) that is subject to overuse, so this can be assessed the same way fisheries would be analyzed. If water is removed from the aquifer for irrigation and household use by wells and the aquifer is not owned by any individual, there may be too many wells used to pump water. 10 20 30 a. (3 points) Complete the following table assuming that the cost to operate each well is 600 shillings per day and the water has a value of 0.1 shillings per gallon (shillings are the local currency with 1 U.S. dollar 105 Kenyan Shillings, but do not convert your answers to dollars, just use shillings). 40 50 60 70 80 b. (2 points) If each well is owned by an individual, how many wells will be operated if individuals treat the aquifers as a common property resource water (you don't have the exact answer the answer is between two values)? Explain your answer. c. (2 points) What is the economically efficient number of wells that should be pumping? Explain your answer. Total Cost Wells (Gal/day) Wells) (PxQ) 100,000 6,000 (Operating Total cost x 200,000 280,000 12,000 18,000 340,000 24,000 380,000 30,000 400,000 36,000 400,000 42,000 380,000 340,000 48,000 58,000 Revenue Profit Marginal Revenue per well ATR (TR-TC) AWells 1000 Average Revenue per well TR Wells 90 Note: P-Price; Q-quantity (gallons/day) TR is total revenue; TC-total cost; ATR- change in TR (in this case, TR from 20 wells minus TR from 10 wells) and AWells-change in number of wells (e.g., 20-10). 2. A significant new source of water in the form of two aquifers was recently discovered in the dry northern region of Turkana in Kenya, East Africa where a significant population lacks access to safe water. As background information, the aquifers contain nearly 250 billion cubic meters of water (66 trillion gallons) and are recharged at a rate of 3.4 billion cubic meters (898 billion gallons) each year. The recharge rate is how much water goes back into the aquifer from rainfall, seepage from rivers, and other natural sources, and is about the amount of water consumed annually in Austria. The aquifers represent an open access resource (common property resource) that is subject to overuse, so this can be assessed the same way fisheries would be analyzed. If water is removed from the aquifer for irrigation and household use by wells and the aquifer is not owned by any individual, there may be too many wells used to pump water. 10 20 30 a. (3 points) Complete the following table assuming that the cost to operate each well is 600 shillings per day and the water has a value of 0.1 shillings per gallon (shillings are the local currency with 1 U.S. dollar 105 Kenyan Shillings, but do not convert your answers to dollars, just use shillings). 40 50 60 70 80 b. (2 points) If each well is owned by an individual, how many wells will be operated if individuals treat the aquifers as a common property resource water (you don't have the exact answer the answer is between two values)? Explain your answer. c. (2 points) What is the economically efficient number of wells that should be pumping? Explain your answer. Total Cost Wells (Gal/day) Wells) (PxQ) 100,000 6,000 (Operating Total cost x 200,000 280,000 12,000 18,000 340,000 24,000 380,000 30,000 400,000 36,000 400,000 42,000 380,000 340,000 48,000 58,000 Revenue Profit Marginal Revenue per well ATR (TR-TC) AWells 1000 Average Revenue per well TR Wells 90 Note: P-Price; Q-quantity (gallons/day) TR is total revenue; TC-total cost; ATR- change in TR (in this case, TR from 20 wells minus TR from 10 wells) and AWells-change in number of wells (e.g., 20-10).

Answer rating: 100% (QA)

a Completing the table Wells Q Total Cost TC Total Revenue TR Profit TRTC Average Revenue AR Margina... View the full answer