# Suppose Milwaukee has total urban demand for water from Lake Michigan such that the marginal net benefits are P = 1 – 0.04Q each year; P is in…

Suppose Milwaukee has total urban demand for water from Lake Michigan such that the marginal net benefits are P = 1 – 0.04Q each year; P is in dollars and Q is in billions of gallons. If the Great Lakes Compact limits Milwaukee to 40 billion gallons of consumption over two years, answer the following questions. Let the discount rate be 5%.A) How much would the city consume in each year if water were not limited?