Hand written solutions are strictly prohibited Problem #1: Dave and Art live in a new housing development and would like to have streetlights installed to illuminatethe streets and sidewalks at night. The table shows Dave and Art's individual marginal benefits for different quantities ofstreetlights that could be installed in the neighborhood. Suppose that the marginal cost of installing a streetlight is $11.Dave has marginal benefits of $15 for 1 streetlight, $10 for 2, $5 for 3, and $2 for 4. Art has marginal benefits of $20 for1, $15 for 2, $10 for 3, and $3 for 4. a. What is the socially optimal number of streetlights to be installed in theneighborhood? b. What is the number of streetlights that will be installed if the decsion is left to each individual (e. g.,if the provision decision is left to the private market)? c. How much surplus will be foregone if the installation decision isleft to the private market?

Marginal Benefit (MB) is the additional satisfaction or utility that a consumer receives when they…

1, $15 for 2, $10 for 3, and $3 for 4. a. What is the socially optimal number of streetlights to be installed in the neighborhood? b. What is the number of streetlights that will be installed if the decsion is left to each individual (e. g., if the provision decision is left to the private market)? c. How much surplus will be foregone if the installation decision is left to the private market?

1, $15 for 2, $10 for 3, and $3 for 4. a. What is the socially optimal number of streetlights to be installed in the neighborhood? b. What is the number of streetlights that will be installed if the decsion is left to each individual (e. g., if the provision decision is left to the private market)? c. How much surplus will be foregone if the installation decision is left to the private market?

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter2: Economics: Eight Powerful Ideas

Section: Chapter Questions

Problem 19P

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