Problem
Suppose the state is trying to decide how many miles of a very scenic river it should preserve. There are 100 people in the community, each of whom has an identical inverse demand function given by P = 10 - 1.0q, where q is the number of miles preserved and P is the per-mile price he or she is willing to pay for q miles of preserved river. (a) If the marginal cost of preservation is $500 per mile, how many miles would be preserved in an efficient allocation? (b) How large is the economic surplus?
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.