9. (40 points) Three homeowners (Brienne of Tarth, Sansa Stark, and Rhaegar Targaryen) reside on the banks of a contamin

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9 40 Points Three Homeowners Brienne Of Tarth Sansa Stark And Rhaegar Targaryen Reside On The Banks Of A Contamin 1 (295.27 KiB) Viewed 67 times

9. (40 points) Three homeowners (Brienne of Tarth, Sansa Stark, and Rhaegar Targaryen) reside on the banks of a contaminated lake. The quality of the lake improves as the level of contaminant in parts per million (ppm) decreases. The table below provides information on the homeowners' willingness-to-pay (in discrete form) for improved quality of the lake and on the cost (in discrete form) of cleanup of the lake. a. (20 points) What are the net benefits to Brienne of Tarth, Sansa Stark, and Rhaegar Targaryen if: i. Brienne of Tarth privately cleans up the lake till the equilibrium level? ii. Sansa Stark privately cleans up the lake till the equilibrium level? iii. Rhaegar Targaryen privately cleans up the lake till the equilibrium level? b. (15 points) Suppose the lake is cleaned up till the socially efficient level and the total cost of cleanup is divided equiproportionately amongst the three homeowners. Which homeowners will be better off? c. (5 points) What does your answer tell you about sharing the costs of public goods? Marginal Willingness-to-Pay (Rupees per ppm) Brienne of Tarth Sansa Stark Rhaegar Targaryen Level of Contaminant (ppm) 4 3 11000 8500 7000 5500 4500 6000 3500 1000 2 Marginal Cost of Cleanup (Rs per ppm) 5000 6500 8600 15000 24000 3000 2000 1500 1000 500 0 1 0 0