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In a society of five households, jack, marlie, Chris, rob and alex is planning to provide a neighborhood street lighting in the village. The marginal
In a society of five households, jack, marlie, Chris, rob and alex is planning to provide a neighborhood street lighting in the village. The marginal cost of providing lighting is constant at RM700.00 The marginal benefits of each household for the different quantities of lighting are summarized in the following table: Household's Marginal Benefit No. of Street Lights 1 2 3 4 5 MBA 180 170 160 150 140 MB, 170 160 150 140 130 MBC 160 150 140 130 120 MBY 150 140 130 120 110 140 130 120 110 100 Show that the market would fail to provide the public good. Determine the optimum number of street lights provided. What are the lindahl prices? Show that the total contribution is sufficient to pay the total cost of providing the equilibrium quantity Is there an incentive for anybody to free ride? Explain In a society of five households, jack, marlie, Chris, rob and alex is planning to provide a neighborhood street lighting in the village. The marginal cost of providing lighting is constant at RM700.00 The marginal benefits of each household for the different quantities of lighting are summarized in the following table: Household's Marginal Benefit No. of Street Lights 1 2 3 4 5 MBA 180 170 160 150 140 MB, 170 160 150 140 130 MBC 160 150 140 130 120 MBY 150 140 130 120 110 140 130 120 110 100 Show that the market would fail to provide the public good. Determine the optimum number of street lights provided. What are the lindahl prices? Show that the total contribution is sufficient to pay the total cost of providing the equilibrium quantity Is there an incentive for anybody to free ride? Explain
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