Log out Go to App
Go to App

Learning Materials

Features

Discover

Chapter 31: Q9. (page 692)

The following table displays hypothetical annual total costs and total benefits of conserving wild tigers at several possible worldwide tiger population levels.


a. Calculate the marginal costs and benefits.

b. Given the data, what is the socially optimal world population of wild tigers?

c. Suppose that tiger farming is legalized and that this has the effect of reducing the marginal cost of tiger conservation by$15million for each 2000tiger population increment in the table. What is the new socially optimal population of wild tigers?

Short Answer

Expert verified

For part a, we have the equilibrium where marginal cost equals marginal benefit at population of 8000.

For part b, The optimal point is at8000tigers.

For part c, 10000tigers would be the new ideal point.

Step by step solution

01

Step 1:Given Information(Part a)

In the above given table, we have values on population of wild tigers, total cost and total benefits and in the question, we are asked to find the marginal costs and benefits.

02

Step 2:Calulating marginal costs(Part a)

Marginal cost or benefit is derived by subtracting the consecutive cost or benefit.

03

Step 2:Calulating marginal benefits(Part a)

Upon calculation, determine that at population of 8000, we have the equilibrium, as marginal cost equals marginal benefit.

04

Step 1:Given Information(Part b)

Here , we are asked to find the socially optimal world population of wild tigers.

05

Step 2:Explanation(Part b)

The optimal point is where the marginal cost and marginal benefit are equal. When the marginal benefit and cost are equal to 25 , this happens with 8000tigers.

06

Step 1:Given Information(Part c)

we are asked to find the new socially optimal population of wild tigers when there is a reduction of the marginal cost of tiger conservation by$15million for each 2000tiger population increment in the table.

07

Step 2:Explanation(Part c)

If the cost per tiger drops by a million dollars, the marginal cost for 2000tigers drops by$15 million. The new table will look like this:

08

Step 3:Answer(Part c)

The new optimal point would be 10000tigers.

Unlock Step-by-Step Solutions & Ace Your Exams!

  • Full Textbook Solutions

    Get detailed explanations and key concepts

  • Unlimited Al creation

    Al flashcards, explanations, exams and more...

  • Ads-free access

    To over 500 millions flashcards

  • Money-back guarantee

    We refund you if you fail your exam.

Start your free trial

Over 30 million students worldwide already upgrade their learning with Vaia!

One App. One Place for Learning.

All the tools & learning materials you need for study success - in one app.

Get started for free

Most popular questions from this chapter

Consider the diagram below and respond to the questions that follow.

a. Assume that a new technique for decreasing water pollution lowers the marginal cost of pollution reduction at every level of water cleanliness. Will the ideal % degree of water cleanliness rise or decline after this event? Will the cost of the final unit of water cleanup grow or decrease? Include a visual to help you explain your point.

b. Assume that the event described in item (a) occurs, and that medical studies show that the marginal benefit from reducing water pollution is higher at all levels of water purity. Will the ideal % degree of water cleanliness rise or decrease after both events? Can you predict whether the cost of the last unit of water cleanup will increase or decrease as compared to the initial optimum? To help you clarify your answers, create a new diagram.

Who ultimately pays to address costs of negative externalities created by government agencies such as the EPA when they accidentally release pollutants into the environment?

The market price of insecticide is initially \(10per unit. To address a negative externality in this market, the government decides to charge producers of insecticide for the privilege of polluting during the production process. A fee that fully takes into account the social costs of pollution is determined, and once it is pat into effect, the market supply curve for insecticide shifts upward by \)4 per unit. The market price of insecticide also increases, to $12 per unit. What fee is the government charging insecticide manufacturers?

Why might a low-income nation with a currently very high degree of air cleanliness view a higher pollution level created by newly relocated plants of Chinese firms as optimal?

The following table gives hypothetical annual total costs and total benefits of maintaining alternative populations of Asian elephants.

a. Calculate the marginal costs and benefits, and draw marginalbenefit and cost schedules.

b. Given the data, what is the socially optimal world population of Asian elephants?

c. Suppose that two events occur simultaneously. Technological development allows machines to do more efficiently much of the work that elephants once did, which reduces by \(10million the marginal benefit of maintaining the elephant population for each 7500increment in the elephant population. In addition, new techniques for breeding, feeding, and protecting elephants reduce the marginal cost by\)40million for each 7500increment in the elephant population. What is the new socially optimal population of Asian elephants?
See all solutions

What do you think about this solution?

We value your feedback to improve our textbook solutions.

Study anywhere. Anytime. Across all devices.

Sign-up for free