Question
Risa (R) and Stephen (S) both love Christmas lights. Their marginal benefit curves for Christmas lights are given by the following functions: = 10 5
Risa (R) and Stephen (S) both love Christmas lights. Their marginal benefit curves for Christmas lights are given by the following functions: = 10 5 = 8 2 where Q is the total number of square feet of Christmas lights in the neighborhoodwhenever anybody puts up lights, everybody gets to enjoy them for free. Putting up Christmas lights costs $1 per square foot.
a. Find the total marginal benefit of Christmas lights.
b. How many square feet of Christmas lights will Risa put up if she has to put up lights by herself?
c. How many square feet of Christmas lights will Stephen put up if he has to put up lights by himself?
d. What is the socially optimal level of Christmas lights? How does this compare to the sum of parts b and c?
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