Free-Response Question

Quantity of Palm trees Total social cost = total private cost Total private benefit per resident
0 $0 $0
1 200 8
2 400 12
3 600 14
4 800 15
  1. Question

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    Suppose there are 100 residents on the island of Mahalo. Whenever someone purchases a palm tree to plant on the island, everyone on the island receives the same benefits from the tree, which include beauty, shade, and erosion control. The table above shows the total social cost (which is also the total private cost) and the total private benefit received per resident depending on the quantity of palm trees purchased. Use this information to answer the questions below.