Simon owns land along the shore of Lake Michigan. The table below describes the marginal benefits to tourists of recreating along his property (per person who has access for a day), as well as the marginal costs to Simon of more people getting access to the shore (due to litter, noise, and seeing other people on the shore).

 

No. People

1

2

3

4

5

6

7

8

9

10

Marginal Benefit, People

150

110

80

60

40

25

10

-10

-30

-60

Marginal Cost, Simon

10

20

30

40

50

60

70

80

100

125

 

(a) If Simon could not limit access across his property to the shore or otherwise limit or influence tourists' behavior, how many people would go to the seashore? (Fractions of people cannot exist. Give a whole-number answer.) Explain your answer.


(b) What is the efficient number of people to use Simon's shore? (Fractions of people still cannot exist. Give a whole-number answer.) Explain your answer.


 

(c) Now, Simon has the right and the ability to prevent people from using his property. In the absence of government programs to control seashore access, is there any way that the efficient solution might be achieved? If so, how? If not, why not?

    • Posted: 3 years ago
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