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

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