1. Security guard public goods because the cost is being shared by all the owners for the mutual benefits of the complex. And all shops are communication shops so they only need general security and not security for each one

2. When each shop owner appoints a separate security

cost per security= 300

but the benefit for a single shop =10

so there is a cost of 290 greater.

MARGINAL BENEFIT FOR ALL SHOP

10*100=1000

4*100=400

2*100=200

1*100=100

Question 1

Now let us assume that the shop owners establish a union that acts as a government to address the security at the GOSI complex.

1. What is the optimal (allocative efficiency) number of guards? What is the net benefit at the optimal number of guards?
2. Can you show that the net benefit is less for either one less guard or for one more guard than the net benefit for the optimal number of guards?
3. How might the GOSI union pay for the optimal number of guards?