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Question: Consider an air basin with only two consumer, Huck and Matilda. Suppose Huck's demand for air quality is given by q_h=1-p where p is Huck's marginal willingness to pay for air quality. Similarly, Matilda's demand is given by q_m=2-2p. Air quality can be supplied according to q = p where p is the marginal cost of supply.

a) Graph the aggregate demand for air quality along with individual demands.

b) What is the efficient amount of air quality?

Microeconomics, Economics

  • Category:- Microeconomics
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