Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please provide relevant graph 2. A community of five individuals; Ali, Boy, Chia, Doc and Ed is planning to provide street lighting in their neighborhood.

Please provide relevant graph

image text in transcribed
2. A community of five individuals; Ali, Boy, Chia, Doc and Ed is planning to provide street lighting in their neighborhood. The marginal cost of providing the lighting is constant at RM880. The marginal benefit (demand) function of each individual for the different number of lights are summarized in the following table: Marginal Benefit of Number Street Light No. of Street Lights MB 2 3 4 5 MBA 300 250 209 180 120 MBB 250 210 176 135 90 MBc 220 180 138 120 80 MBD 350 300 249 210 160 MBE 210 170 108 90 57 a. Determine the optimum quantity of the public good. (5 points) b. Determine the Lindahl prices? (5 points) C. Show that the community will collect sufficient funds to pay for the optimum quantity of the public good. (4 points) d. If a tax is imposed by the government to provide the public good, what would be the number of street lights provided? (6 points) e. Discuss the differences in the funding mechanism between the tax imposition and the Lindahl model of the public good provision. (5 points) (TOTAL: 25 POINTS)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Research In Forest Economics And Forest Policy

Authors: Marion Clawson

1st Edition

1317362624, 9781317362623

More Books

Students also viewed these Economics questions

Question

How would you figure out the answer for # 5

Answered: 1 week ago

Question

6. What information processes operate in communication situations?

Answered: 1 week ago

Question

3. How can we use information and communication to generate trust?

Answered: 1 week ago