Problem
The following table displays hypothetical annual total costs and total benefits of conserving wild tigers at several possible worldwide tiger population levels.
|
Population of
|
Total Cost
|
Total Benefit
|
|
Wild Tigers
|
($ millions)
|
($ millions)
|
|
0
|
0
|
40
|
|
2,000
|
25
|
90
|
|
4,000
|
35
|
130
|
|
6,000
|
50
|
160
|
|
8,000
|
75
|
185
|
|
10,000
|
110
|
205
|
|
12,000
|
165
|
215
|
a. Calculate the marginal costs and benefits.
b. Given the data, what is the socially optimal world population of wild tigers?
c. Suppose that tiger farming is legalized and that this has the effect of reducing the marginal cost of tiger conservation by $15 million for each 2,000-tiger population increment in the table. What is the new socially optimal population of wild tigers?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.