Assume a reservoir’s water supply of 25,000 acre-feet of water can be used for municipal (m) and/or agricultural (a) purposes. The total benefits for each use are described as: TBa = 1000Wa – 0.025Wa2 So, the Marginal Benefit for agriculture is: MBa = 1000 – 0.05 Wa TBm = 1500Wm – 0.1Wm2 So, the Marginal Benefit for municipal purposes is: MBm = 1500 – 0.2 Qm Where Wa is acre feet of water used in agriculture and Wm is acre feet of water used for municipal purposes b. Suppose an additional 1,000 acre feet of water could be had by constructing a new reservoir. What is the new efficient allocation of water for each category of use?
Assume a reservoir’s water supply of 25,000 acre-feet of water can be used for municipal (m) and/or agricultural (a) purposes. The total benefits for each use are described as: TBa = 1000Wa – 0.025Wa2 So, the Marginal Benefit for agriculture is: MBa = 1000 – 0.05 Wa TBm = 1500Wm – 0.1Wm2 So, the Marginal Benefit for municipal purposes is: MBm = 1500 – 0.2 Qm Where Wa is acre feet of water used in agriculture and Wm is acre feet of water used for municipal purposes b. Suppose an additional 1,000 acre feet of water could be had by constructing a new reservoir. What is the new efficient allocation of water for each category of use?
Economics (MindTap Course List)
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ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Roger A. Arnold
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- Assume a reservoir’s water supply of 25,000 acre-feet of water can be used for municipal (m) and/or agricultural (a) purposes. The total benefits for each use are described as:
TBa = 1000Wa – 0.025Wa2
So, the Marginal Benefit for agriculture is: MBa = 1000 – 0.05 Wa
TBm = 1500Wm – 0.1Wm2
So, the Marginal Benefit for municipal purposes is: MBm = 1500 – 0.2 Qm
Where Wa is acre feet of water used in agriculture and Wm is acre feet of water used for municipal purposes
b. Suppose an additional 1,000 acre feet of water could be had by constructing a new reservoir. What is the new efficient allocation of water for each category of use?
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