Business, 08.03.2021 20:10, dominguezjose625

Consider the issue of determining the optimal amount of investment in national defense in a country composed of two regions. Assume that national defense is a pure public good; it is non-rival and non-excludable. Denote by q the amount of national defense. The total cost of producing q units of defense is C(q) = 109. In region 1, the total benefit of national defense is: B1(q) = 10q -1/2q^2

In region 2, the total benefit of national defense is

B2(q) = 20q - q^2

Suppose the national government knows the socially optimal amount of defense, and proposes to fund it by requiring each region to pay half of the total cost.

1. Calculate the change in welfare for each region under this policy compared to the scenario where region 1 has to finance all the investment in national defense.
2. If the two regions could vote on whether to adopt this policy instead of having region 1 finance all defense investment, would both regions vote yes?

Answers: 3

Show answers

Other questions on the subject: Business

Business, 22.06.2019 11:30, kaylabethany

Mai and chuck have been divorced since 2012. they have three boys, ages 6, 8, and 10. all of the boys live with mai and she receives child support from chuck. mai and chuck both work and the boys need child care before and after school. te boys attend the fun house day care center and mai paid them $2,000 and chuck paid them $3,000. mai's agi is $18,000 and chuck's is $29,000. mai will claim two of the boys as dependents. she signed form 8332 which allows chuck to claim one of the boys. who can take the child and dependent care credit?

Answers: 3

continue

Business, 22.06.2019 16:20, AnhQNguyen6764

The following information relates to the pina company. date ending inventory price (end-of-year prices) index december 31, 2013 $73,700 100 december 31, 2014 100,092 114 december 31, 2015 107,856 126 december 31, 2016 123,009 131 december 31, 2017 113,288 136 use the dollar-value lifo method to compute the ending inventory for pina company for 2013 through 2017.

Answers: 1

continue

Business, 22.06.2019 20:20, baby851

You are the cfo of a u. s. firm whose wholly owned subsidiary in mexico manufactures component parts for your u. s. assembly operations. the subsidiary has been financed by bank borrowings in the united states. one of your analysts told you that the mexican peso is expected to depreciate by 30 percent against the dollar on the foreign exchange markets over the next year. what actions, if any, should you take

Answers: 2

continue

Business, 22.06.2019 20:20, saurav76

Faldo corp sells on terms that allow customers 45 days to pay for merchandise. its sales last year were $325,000, and its year-end receivables were $60,000. if its dso is less than the 45-day credit period, then customers are paying on time. otherwise, they are paying late. by how much are customers paying early or late? base your answer on this equation: dso - credit period = days early or late, and use a 365-day year when calculating the dso. a positive answer indicates late payments, while a negative answer indicates early payments. a. 21.27b. 22.38c. 23.50d. 24.68e. 25.91b

Answers: 2

continue

Do you know the correct answer?

Consider the issue of determining the optimal amount of investment in national defense in a country...