What is the socially optimal level of recreational areas? Assume you cannot purchase partial acres. Explain your answer.

Question 1: The accompanying table (the table is attached in the uploads as “Table 1”) shows Tom and Ray’s total willingness to pay for different amounts of public recreational areas (REC), which is measured in acres. The marginal cost of one acre of recreational area is $1,000.

Part A: What is the socially optimal level of recreational areas? Assume you cannot purchase partial acres. Explain your answer.

Part B: What should be the tax burden to Tom and Ray so that their consumer surpluses are equal? Explain.

Part B: What should be the tax burden to Tom and Ray so that their consumer surpluses are equal? Explain.

Question 2: President Barack Obama appointed Arne Duncan to be the Secretary of Education in 2009. Discuss Secretary Duncan’s methods to address education woes during his tenure as CEO of the Chicago public school system as well as his efforts during his term as Secretary of Education. Summarize the views of his supporters and opponents.

Question 3: Discuss the recent experiences of the U.S. defense industry in contracting out without competitive bidding. Are they successful ventures? What might be the fundamental problem in these contracts?

ATTACHED IS ALSO THE TEXTBOOK ONLY CHAPTERS 9 AND 11 ARE RELEVANT.

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