Please help me solve this problem with steps and work included! The most popular
ID: 1206176 • Letter: P
Question
Please help me solve this problem with steps and work included!
The most popular state park in the Craggy Mountains recently reached the point where a common property resources problem arose — too many people hunted for wild boar each season. The boar population became over hunted and was in peril of extinction. An economist at the local university studied the problem for the park management and estimated the following cost and revenue relationships: Demand: P = 10 - 0.008Q Marginal social cost: MSC = 1.00 + 0.0067Q Marginal private cost: MPC = 1.00 + 0.0010Q. The variable Q represents the number of boars killed each season and price P is in hundreds ($). a. Determine the equilibrium number of boars killed per season, when there is unlimited access to the park. b. Determine the per boar fee that must be charged to reduce the harvest to the efficient level. c. Determine the social cost of unlimited hunting of the boar.
If A.) is Q=529 Boars,
What is B?
Explanation / Answer
a) when there is unlimited access to the hunting then we eaute demand to MPC to get the number of boars killed. we get Q=1000.
b) When we equate demand to MSC then we get the optimal number of bears to be killed which comes out to be Q=612.
Putting Q=612 into MPC eauation to get price we get P1=1.612 and again putting it in MSC euation we get P2=5.1004
Subtracting P1 and P2 we get tax=3.4884 which should be charged per boar to reduce the harvest to the efficient level.
c) Social cost of unlimited hunting is found by substituting Q=1000 in MSC equation. We get 7.7 as the MSC.
d) When Q=529 boars then P1= 1.5129 and P2=4.5443. Then tax= 3.0153