Question

uppose that a small town wants to install street lamps, which are nonrival in consumption and nonexcludable. each of the 25 people in the town value street lamps according to the given schedule. street lamps each cost $250 to install. use this information to answer the questions. what is the socially optimal number of street lamps? 6 street lamps suppose that 20 of the 25 townspeople decide that they will not help pay for street lamps, and

Answer 1

Six street lamps are the optimum quantity from a social standpoint.

How many street lights are ideal?

Keep in mind that as street lights are considered public commodities, you should sum up each person's marginal benefit for each street light. The ideal number of street lamps must be six since the social marginal benefit of the sixth bulb is equal to the marginal cost of the lamps ($250).

What is the smallest possible gain from purchasing street lamps?

The marginal benefit of the first lamp for a group of only five town residents who are prepared to donate toward the purchase of lamps is only 5 x $30 = $150. The group will not purchase any lamps because this is less than the marginal cost of them.

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