- 6 Suppose There Are Two Neighbors X And Y Who Both Have Their Own Retention Pond Water Source The Marginal Net Ben 1 (32.29 KiB) Viewed 34 times
6. Suppose there are two neighbors, X and Y, who both have their own retention pond (water source). The marginal net ben
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6. Suppose there are two neighbors, X and Y, who both have their own retention pond (water source). The marginal net ben
6. Suppose there are two neighbors, X and Y, who both have their own retention pond (water source). The marginal net benefits of Neighbor X and Neighbor Y are as follows: = MNB 40-4qz MNBy = 80 - 4qy (a) Suppose surface water is not scarce. How much water will each neighbor consume? (b) Calculate the total benefits for each neighbor. (c) Assume each neighbor only has 12 units available in their respective ponds. Calculate consumption for each neighbor. (d) Suppose the two neighbors share a pond instead. The pond size is Q = 12. Calculate optimal consumption for each neighbor from the POV of a social planner. (e) How much social surplus would be gained by allowing socially optimal allocation of water (versus equal allocation)?
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