Question
Suppose that Angela, Bob, and Charlene live on the same street in a northern town. In the winter, all of them like to have their
Suppose that Angela, Bob, and Charlene live on the same street in a northern town. In the winter, all of them like to have their street plowed. Each of them have the same inverse demand function for snow removal, given by MB = 27 - 4.1 x Q, where MB is the maximum they would pay for Q plowings per month. Suppose that the marginal cost of plowing the snow one more time is constant at MC = $30. We ignore the odd fact that MC would likely decrease with higher frequency Q, because less snow would build up since the last plowing, and it would require less time and fuel. What is the socially efficient frequency of plowing that should be done?
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