Consider a small town with only three families, the Greene family, the Brown family, and the Black family. The town does not currently have any streetlights so it is very dark at night. The three families are considering putting in streetlights on Main Street and are trying to determine how many lights to install. The table below shows each family’s willingness to pay for each streetlight.Number ofStreetlightsThe Greene FamilyThe Brown FamilyThe Black Family1$340$480$42022603804003160260340440130240505010060020Refer to Table 11-2. Suppose the cost to install each streetlight is $360 and the families have agreed to split the cost of installing the streetlights equally. If the residents choose to install the number of streetlights that will maximize total surplus from the streetlights, how much total surplus will the Greene family receive? a.-$80 b.$360 c.$320 d.$480

Calculate the total willingness to pay of Greene family as follows:Greene family =340+260+160+40+0+0…

Answered: Consider a small town with only three…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider a small town with only three families, the Greene family, the Brown family, and the Black family. The town does not currently have any streetlights so it is very dark at night. The three families are considering putting in streetlights on Main Street and are trying to determine how many lights to install. The table below shows each family’s willingness to pay for each streetlight.

Number of Streetlights	The Greene Family	The Brown Family	The Black Family
1	$340	$480	$420
2	260	380	400
3	160	260	340
4	40	130	240
5	0	50	100
6	0	0	20

Refer to Table 11-2. Suppose the cost to install each streetlight is $360 and the families have agreed to split the cost of installing the streetlights equally. If the residents choose to install the number of streetlights that will maximize total surplus from the streetlights, how much total surplus will the Greene family receive?

	a.	-$80
	b.	$360
	c.	$320
	d.	$480

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