Irrigation water is supplied in units called acre-feet. Suppose that the marginal cost of supplying each...

Irrigation water is supplied in units called acre-feet. Suppose that the marginal cost of supplying each acre-foot of irrigation water is $40, and the market demand for irrigation water is P = 100 - 2q.

i) Graph this market. Assume it is perfectly competitive. ii) What is the privately efficient allocation of irrigation water? iii) Calculate market participants' net benefits. iv) How are net benefits distributed between consumers and producers in this market?

Expert Solution

Rahul Sunny answered 6 hours ago

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