Please answer Q1 and Q2.

(2 typed pages including tables/figures)

A vigorous debate rages over which of two potential urban water programs is a better way to supply safe affordable drinking water to residents of a large poor city. The high points of each program are:

• Program 1: Supply a minority of the population with cheap pipedin water by delivering 10,000 acre feet per year of utility supplied water from a central delivery system, at a price equal to the average cost of supply, $300/acft. The remainder can only buy from street vendors described athttps://www.wiego.org/informal-economy/occupational-groups/street-vendors(Links to an external site.)a total quantity of 40,000 acft, at a price of $900 / acft.

• Program 2: Supply the entire population by meeting all demands an amount equal to 70,000 acrefeet per year. This program would build and use a shiny new engineered central delivery system that supplies at a constant price equal to the average cost of supply. That price is $600 / per acre foot, charged to all buyers.

Your task is to compareTotalAnnualEconomicBenefits (TAEB = CS + TR - TC) of each program by ranking the economic performance of each from the view of the city's water buyers/suppliers. You can use these abbreviations:

CS = consumer surplus = willingness to pay minus actual payments calculated for each program

TR = total revenue = price x quantity calculated for each program

TC = total cost = average cost x quantity calculated for each program

I will show you more about these terms in class (Jan 25, 27), by showing you the down-sloping demand function for which the maximum price of water (y intercept) is $1650 per acft.

Q1. Calculate the Total Annual Economic Benefits (TAEB) to the city's water stakeholders for each program and show calculations.

Q2. You have been hired as an expert consultant, and will snag a juicy consulting fee if you recommend the right choice. Describe your recommended choice and explain why you would make it.