The following table gives hypothetical annual total costs

QUESTION

The following table gives hypothetical annual total costs and total benefits of maintaining alternative populations of Asian elephants. (See page 697.)Population of Asian ElephantsTotal Cost ($millions)Total Benefit ($millions)Marginal CostsMarginal Benefits000–7,500201002010015,00045185258522,50090260457530,000155325656537,500235375805045,0003304109535a. Calculate the marginal costs and benefits, and draw marginal benefit and cost schedules.b. Given the data, what is the socially optimal world population of Asian elephants?c. Suppose that two events occur simultaneously. Technological development allows machines to do more efficiently much of the work that elephants once did, which reduces by $10 million the marginal benefit of maintaining the elephant population for each 7,500 increment in the elephant population. In addition, new techniques for breeding, feeding, and protecting elephants reduce the marginal cost by $40 million for each 7,500 increment in the elephant population. What is the new socially optimal population of Asian elephants?

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