Scenario: Frank and Nancy live in a small community on Cape Cod in Massachusetts. For simplicity, assume Frank and Nancy are the only individuals in the community. Each has a demand for mosquito control, given by the following table, equations, and figure. Assume that mosquito control is a public good. Mosquito control is provided at a constant marginal cost of $120.

Frank's demand: qFᵣₐnk = 200 - p,
Frank's inverse demand = (Marginal Private Benefit): p = 200 - q,
Nancy's demand: qNₐncᵧ = 100 - p,
Nancy's inverse demand = (Marginal Private Benefit): p = 100 - q,

-Refer to the scenario above.Now suppose that mosquito control will be publicly provided.What is the market equilibrium quantity of mosquito control services provided? Explain your answer graphically.
A) 0 units
B) 80 units
C) 90 units
D) 120 units

Question

Scenario: Frank and Nancy live in a small community on Cape Cod in Massachusetts. For simplicity, assume Frank and Nancy are the only individuals in the community. Each has a demand for mosquito control, given by the following table, equations, and figure. Assume that mosquito control is a public good. Mosquito control is provided at a constant marginal cost of $120.
  
Frank's demand: qFᵣₐnk = 200 - p,
Frank's inverse demand = (Marginal Private Benefit): p = 200 - q,
Nancy's demand: qNₐncᵧ = 100 - p,
Nancy's inverse demand = (Marginal Private Benefit): p = 100 - q,
 
-Refer to the scenario above.Now suppose that mosquito control will be publicly provided.What is the market equilibrium quantity of mosquito control services provided? Explain your answer graphically.
A) 0 units 
B) 80 units 
C) 90 units 
D) 120 units

Quizplus · Accepted Answer

The market equilibrium quantity of mosquito control services provided is 90 units. This is the point where the demand curve and the supply curve intersect. At this point, the quantity of mosquito control services provided is equal to the quantity of mosquito control services demanded.

Scenario: Frank and Nancy Live in a Small Community on Cape