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

question 195

Multiple Choice

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.In the private market equilibrium,what are the quantities demanded of mosquito control for Frank and Nancy? Explain your answer.

• A) 0 units for Frank, 0 units for Nancy
• B) 80 units for Frank, 0 units for Nancy
• C) 80 units for Frank, 10 unit for Nancy
• D) 120 unit for Frank, 20 unit for Nancy

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Definitions:

Marginal Tax Rate

The tax rate paid on an additional dollar of income.

Taxable Personal Income

The portion of an individual's earnings that is subject to taxation, after accounting for deductions and exemptions.

Proprietary Income

Income generated from owning a business or holding exclusive rights to a product or service.

Government-Run Businesses

Enterprises or organizations that are owned and operated by the government rather than by private individuals or other businesses.