The city of Econoville currently charges a fee of $0.50 to residents for each 50 gallon can of trash the city garbage service collects from their residence. A 50 gallon can of recyclable trash costs a resident $3.50 to be collected. The marginal social cost of garbage disposed is: MSC_d (g_d) = 12.50 where g_d is a 50 gallon drum of garbage disposed. The marginal social cost of garbage recycled is: MSC_r (g_r) = 2.50 g_r. The marginal benefit function of garbage removed from residences is: MB(g_d, g_r) = 800 - 2(g_d + g_r). Given the payment plan for garbage disposal, what level of garbage are the city residents disposing each year? How much will each resident recycle with this payment plan? Is this level of disposal and recycling efficient? Why or why not? What is the optimal level of garbage disposed and garbage recycled in Econoville? How can Econoville encourage residents to dispose and recycle the optimal amounts of garbage?

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The Answer of The city of Econoville currently charges a fee of $0.50 to residents for each 50 gallon can of trash the city garbage service collects from their residence. A 50 gallon can of recyclable trash costs a resident $3.50 to be collected. The marginal social cost of garbage disposed is: MSC_d (g_d) = 12.50 where g_d is a 50 gallon drum of garbage disposed. The marginal social cost of garbage recycled is: MSC_r (g_r) = 2.50 g_r. The marginal benefit function of garbage removed from residences is: MB(g_d, g_r) = 800 - 2(g_d + g_r). Given the payment plan for garbage disposal, what level of garbage are the city residents disposing each year? How much will each resident recycle with this payment plan? Is this level of disposal and recycling efficient? Why or why not? What is the optimal level of garbage disposed and garbage recycled in Econoville? How can Econoville encourage residents to dispose and recycle the optimal amounts of garbage?

The City of Econoville Currently Charges a Fee of $0