QUESTION 2: FREE RIDER (10 marks)

Suppose 4 residents of a neighbourhood decide to get streetlights for the area. The table below shows the individuals willingness to pay (in hundreds of dollars) for the same depending upon the number of streetlights. Note more the number of streetlights in the neighbourhood, safer it is for everyone in the area.

NUMBER OF STREETLIGHTS	Individual 1	Individual 2	Individual 3	Individual 4
1	15	20	4	5
2	10	15	3	4
3	5	10	2	3
4	0	5	1	2

a. If the cost of supplying each streetlight is $1500, provision of how many streetlights will ensure that the total surplus is maximized? Assume the cost of streetlights is equally split across the neighbours. Explain your answer. (5 marks)

b. Calculate the consumer surplus of each of the individuals. Who gains most? How many residents face with a loss? (3mark)

c. Given your answers above, do you think these individuals will be able to agree upon the number of streetlights to be provided? Explain in 2-3 sentences. (2 marks).