Business, 01.03.2021 22:20 nya6557

Adam and Eve live on two sides of the Garden of Eden, a small suburban development. After they move in, an old PCB dump is discovered in between their houses. If X total tons of PCB's are removed from the dump, the two have a true willingness to pay (WTP) to finance a clean-up equal to:ADAM's WTP = 10 - XEVE's WTP = 6 - Xa. Adam's WTP is higher than Eve's. Does this necessarily imply that Eve is less concerned about exposure to PCB's than Adam? Why or why not?b. Draw diagrams illustrating the two individual’s demand curves for clean-up, and the total demand for clean-up in the neighborhood. Derive the function for the total demand. What is the total WTP for the third ton of clean-up?c. If cleaning-up costs $12 per ton, is there sufficient WTP in this small community to finance 2 tons? What are two potential reasons why a voluntary clean-up might nevertheless fail?d. What’s the optimal level of cleanup?

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Adam and Eve live on two sides of the Garden of Eden, a small suburban development. After they move...

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