An Airport Is Located Next to a Housing Development

question 25

Multiple Choice

An airport is located next to a housing development. Where X is the number of planes that land per day and Y is the number of houses in the housing development, profits of the airport are 38X - X² and profits of the developer are 28Y - Y² - XY. Let H₁ be the number of houses built if a single profit-maximizing company owns the airport and the housing development. Let H₂ be the number of houses built if the airport and the housing development are operated independently and the airport has to pay the developer the total "damages" XY done by the planes to the developer's profits.

• A) H₁ = H₂ = 6.
• B) H₁ = 14 and H₂ = 6.
• C) H₁ = 6 and H₂ = 14.
• D) H₁ = 8 and H₂ = 13.
• E) H₁ = 13 and H₂ = 17.

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Definitions:

Payment of Funds

The act of transferring money from one party to another as a form of compensation or fulfillment of an obligation.

Moral Obligations

Duties that arise from ethical principles rather than legal requirements.

Promisee

A person to whom a promise is made.

Legal Obligations

Duties enforced by law, requiring individuals or organizations to act or refrain from acting in a certain manner.