Question

The most popular state park in the Craggy Mountains recently reached the point where a common property resources problem arose — too many people hunted for wild boar each season. The boar population became over hunted and was in peril of extinction. An economist at the local university studied the problem for the park management and estimated the following cost and revenue relationships:
Demand: P = 10 - 0.008Q
Marginal external cost: MEC = 1 + 0.007Q
Marginal private cost: MPC = 1 + 0.001Q.
The variable Q represents the number of boars killed each season and price P is in hundreds ($).

a. Determine the equilibrium number of boars killed per season, when there is unlimited access to the park.  (whole number, no decimals)

b. What is the efficient quantity of boars hunted per season?  (whole number, no decimals)

c. Determine the per boar fee that must be charged to reduce the harvest to the efficient level.  (round to one decimal point)

d. Determine the social cost (DWL) of unlimited hunting of the boar.  (Whole number: no decimals, commas, or dollar signs.)

Answer 1