6. Every hour, on the hour, in the main square of Krakow, Poland, a trumpeter provides...
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6. Every hour, on the hour, in the main square of Krakow, Poland, a trumpeter provides a haunting call from the top of a church tower. The call is a public good for those in the square below. There are (only) two types of people in the square, tourists and residents. The marginal willingness-to-pay of tourists (MWTPT, in zloty/note) for the trumpet call every hour can be represented as MWTPT-40-Q, where Q is the length of the call (notes/hour). The marginal willingness-to-pay of residents for the trumpet call (MWTPR) can be represented by MWTPR=46-2Q. a. (8 points) What is the social MWTP curve for the Krakovian trumpet call? Please provide a graph of this situation (as in Diagram of the Day 11), indicating the willingness-to-pay of tourists, residents, and society. b. (6 points) Imagine that the marginal cost of the trumpet call is constant at 20 zloty per note. What is the socially optimal length (notes per hour) of the trumpet call? If, instead, the marginal cost of the trumpet call is constant at 10 zloty per note, what is the socially optimal length of the trumpet call? Please indicate these situations on your graph from part a. c. (4 points) Will noncooperative behavior between the tourists and the residents lead to the socially optimal length of the trumpet call, if the marginal cost is 10 zloty per note? Explain. 6. Every hour, on the hour, in the main square of Krakow, Poland, a trumpeter provides a haunting call from the top of a church tower. The call is a public good for those in the square below. There are (only) two types of people in the square, tourists and residents. The marginal willingness-to-pay of tourists (MWTPT, in zloty/note) for the trumpet call every hour can be represented as MWTPT-40-Q, where Q is the length of the call (notes/hour). The marginal willingness-to-pay of residents for the trumpet call (MWTPR) can be represented by MWTPR=46-2Q. a. (8 points) What is the social MWTP curve for the Krakovian trumpet call? Please provide a graph of this situation (as in Diagram of the Day 11), indicating the willingness-to-pay of tourists, residents, and society. b. (6 points) Imagine that the marginal cost of the trumpet call is constant at 20 zloty per note. What is the socially optimal length (notes per hour) of the trumpet call? If, instead, the marginal cost of the trumpet call is constant at 10 zloty per note, what is the socially optimal length of the trumpet call? Please indicate these situations on your graph from part a. c. (4 points) Will noncooperative behavior between the tourists and the residents lead to the socially optimal length of the trumpet call, if the marginal cost is 10 zloty per note? Explain.
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