2. The following table shows the marginal benefit per year (in dollars) to all the households in a small community from the hiring of additional firefighters.

The table also shows the marginal cost per year (in dollars) of hiring additional firefighters.

a. Is the service provided by the additional firefighters a public good?

b. Plot the marginal benefit and the marginal cost in a graph, with the number of firefighters on the horizontal axis.

c. What is the optimal amount of this public good (in terms of the number of firefighters)? Illustrate your answer on the graph in part (b).

d. Is this marginal benefit schedule the same as the town’s demand curve for firefighters?

Transcribed Image Text:

Number of Firefighters 1 Marginal Benefit for for the Community Marginal Cost 1,000,000 34,000 12345678 500,000 35,000 300,000 36,000 100,000 37,000 70,000 38,000 50,000 39,000 40,000 40,000 30,000 41,000 9 20,000 42,000 10 10,000 44,000