Question: Please see the question below and answer with an explanation 3. Assume that everybody in New Liskeard, with population n + 1, n 2 1000,

Please see the question below and answer with an explanation

Please see the question below and answer with an explanation 3. Assume

3. Assume that everybody in New Liskeard, with population n + 1, n 2 1000, is just like everyone else. Everybody likes to drive around town but nobody likes the resulting noise, pollution and trafc congestion. Each resident's utility function is U(m,d,h)=m+add2bh/'n., a>b>0 where m is the number of Big Macs consumed per day, d is the number of hours per day that each person drives, h is the total number of hours driven by all other citizens, and a and b are parameters of the utility function. In addition, suppose the price of a Big Mac is 1 dollar, everyone has an income of y > ab dollars per day and it costs nothing to drive. (a) Find U in the private equilibrium as a function of a, b, y. (b) Find the tax rate, t, measured in dollars per hour of driving that the government would have to levy to maximize the utility of each resident. Note that 15 will depend on at least one of a, b and y

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