投资作业代写 Investment代写

Discussion/practice questions week 7

投资作业代写 1.A village has six residents, each of whom has accumulated savings of $100. Each villager can use this money either to buy a government bond ···

1. 投资作业代写

A village has six residents, each of whom has accumulated savings of $100. Each villager can use this money either to buy a government bond that pays 10 percent interest per year or to buy a 1-year-old goat, set it onto the commons to graze, and sell it after a year. The price the villager gets for a 2-year-old goat depends on the amount of weight it gains while grazing on the commons, which in turn, depends on the number of goats sent onto the commons, as shown in the following table:

a. If each villager decides individually how to invest, then how many goats will be sent onto the commons and how many villagers will buy a bond? What will be the resulting village income?’

b. What is the socially optimal number of goats for this village to send onto the commons? What would village income be in that case?

c. The village committee votes to auction the right to graze goats on the commons to the highest bidder. Assuming the villagers can both borrow and lend at 10 percent annual interest, how much will the right sell for at auction? How many goats will the new owner send onto the commons, and what will be the resulting village income?

2. 投资作业代写

Carl likes to make shrub sculptures in his backyard with a loud hedge trimmer.

Five of his nearby neighbors are annoyed by the noise created, and would each be willing to pay $1/hour if the noise could stop.

Suppose Carl’s marginal benefit from gardening each week is 𝑀𝐵 = 30 − 𝑄 ($/hour), and his marginal cost is 𝑀𝐶 = $10/ℎ𝑜𝑢𝑟 (= net earnings from doing the same work for someone else).

a. What is the hourly cost that Carl is imposing on his neighbors combined? What is the socially optimal number of hours Carl should spend gardening every week? Assuming Carl and his neighbors don’t communicate and there are no noise limits Carl has to obey, how many hours will he actually spend gardening? Illustrate these quantities and all relevant curves in a graph.

b. How much total surplus does Carl get from this activity, and what is the total cost he imposes on his neighbors? What is the deadweight loss created?

c. Would a tax imposed on the use of loud hedge trimmers help to achieve the efficient (socially optimal) outcome? What would the tax have to be?

d. What if the combined annoyance to the neighbors from each extra hour of gardening is actually 5 + 𝑄/4 ($/hour)? What would that indicate and does it seem reasonable? (Optional: Answer all the previous questions for this scenario.)