Carrie, Sherry, and Mary are neighbors whose three
by | Mar 18, 2020 | Uncategorized
2. Carrie, Sherry, and Mary are neighbors whose three houses surround a small field. They have decided to get together to plant some native, low-maintenance, eco-system friendly flowers in the field. They have some college students who are willing to plant the flowers for free (these poor students have not yet learned to value the opportunity cost of their time). The three women each have different opinions on the number of flowers to plant. The following table shows the marginal benefit each one derives from extra packets of flower seeds:
Marginal Benefit of Seed Packets to:
|
# packets
|
Carrie
|
Sherry
|
Mary
|
|
1
|
$1.25
|
$2.00
|
$1.35
|
|
2
|
$1.00
|
$1.75
|
$1.20
|
|
3
|
$0.75
|
$1.50
|
$1.05
|
|
4
|
$0.50
|
$1.25
|
$0.90
|
|
5
|
$0.25
|
$1.00
|
$0.75
|
|
6
|
$0
|
$0.75
|
$0.60
|
|
7
|
$0
|
$0.50
|
$0.45
|
|
8
|
$0
|
$0.25
|
$0.30
|
|
9
|
$0
|
$0
|
$0.15
|
|
10
|
$0
|
$0
|
$0
|
a. Graph the marginal benefit schedules of Carrie, Sherry, and Mary all on one graph. Label the graph completely.
b. On the same graph, add in the aggregate (market) marginal benefit schedule, labelling carefully.
c. Assume each packet of seeds costs $2.00. Draw the marginal cost curve into your graph.
d. What is the efficient number of seed packets that the three women should purchase? What is the individual marginal value of the packet for each of them?
e. What does this question have to do with environmental economics? Explain in 2-3 sentences.
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