Answer to Question #88116 in Economics for t

Question

in the houshold she shares with her parents, little chelseas joy is a non rival, non excludable good. Bills marginal willingness to pay for joy for chelsea is 100-2Q. Hillarys is 200-Q. little chelsea has no money and cannot borrow, beg, or earn any. the marginal cost of procuring joy for chelsea is 6Q.

a) what is chelseas mwtp for her own joy
b) graph the households mwtp for, and the marginal cost of chelseas joy.
c)how much joy is it efficient for the household to buy for chelsea
d) if hillary is too mad at bill to talk to him, is the household likely to buy the amount you gave as your answer in part 3

Answer 1

a) Chelseas mwtp = 0, because she has no money.

b) The households mwtp is the sum of individual mwtp, so households mwtp = 300 - 3Q.

c) The amount for the household to buy for chelsea is efficient when mwtp = mc, so:

300 - 3Q = 6Q,

Q = 33.3 units.

d) If hillary is too mad at bill to talk to him, then the household is likely to buy less then in part 3.