Lighthouses are a good that is non-excludable and non-rival (i.e. a Public Good). Given there are currently 2 boats in the area and the marginal cost shown in gray. What is the Socially Optimal level of Lighthouses?

Lighthouses are a good that is non-excludable and non-rival (i.e. a Public Good). Given there are currently 2 boats in the area and the marginal cost shown in gray. What is the Socially Optimal level of Lighthouses?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter12: Environmental Protection And Negative Externalities

Section: Chapter Questions

Problem 38CTQ: How can high-income countries benefit from covering much of the cost of reducing pollution created...

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Question

Lighthouses are a good that is non-excludable and non-rival (i.e. a Public Good).
Given there are currently 2 boats in the area and the marginal cost shown in gray.
What is the Socially Optimal level of Lighthouses?
02
49
3
O
t
05
Price ($)
$80-
$70-
$60-
$50
$40
$30-
$20-
$10-
0
0
Lighthouse Market
2
3
Lighthouses, QL
Marginal Cost
5
MBA
MBB
6

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