Suppose that 10 people live on a street and that each of them is willing to pay $2 foreach extra streetlight, regardless of the number of streetlights. Assume the cost ofproviding x streetlights is given by c() = x².a. What is the Pareto efficient number of streetlights to provide?b. How many streetlights will the market provide if all people choose whether to bystreetlights independently? Assume individuals make the choice of whether to buy astreet light sequentially.c. Imagine the government offers a subsidy of 1 dollar for each street lightpurchased. What will be the equilibrium number of streetlights?d. Suggest two policies the government may implement to achieve the efficientprovision of street lights.

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Suppose that 10 people live on a street and that each of them is willing to pay $2 for each extra streetlight, regardless of the number of streetlights. Assume the cost of providing x streetlights is given by c(x) = x². a. What is the Pareto efficient number of streetlights to provide?

Suppose that 10 people live on a street and that each of them is willing to pay $2 for each extra streetlight, regardless of the number of streetlights. Assume the cost of providing x streetlights is given by c(x) = x². a. What is the Pareto efficient number of streetlights to provide?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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