Mosquito control is non-rival and non-excludable. Suppose the economy consists of two people who are identical and have the following inverse demand…
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Mosquito control is non-rival and non-excludable. Suppose the economy consists of
two people who are identical and have the following inverse demand for mosquito
control:P = 50 – y
where y is the quantity of control. The cost of mosquito control is $20 per unit.
a. What is the socially optimal level of mosquito control?
b. Suppose that the government does not provide mosquito control. How much
mosquito control would individual 1 provide if she believes that individual 2
will not provide any control? How much would she provide if she believes
individual 1 will provide 10? How much if she believes individual 2 will
provide 30 units?
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