The table above provides information about the marginal social ...

[MirandaLo]

The table above provides information about the marginal social cost and marginal social benefit of street lights, which are a public good.
 
  a) What quantity would a private company provide? Why?
  b) What is the efficient quantity?

Question 2

In the above figure, the indifference curves indicate that the two goods are
 
  A) perfect complements.
  B) perfect substitutes.
  C) ordinary goods.
  D) normal goods.

[pocatato]

Answer to Question 1

a) Street lights are a public good, so a private company would provide zero street lights. The company would provide zero because everyone would free ride, that is, no one would voluntarily pay for the street lighting. Because the company knows that no one will pay, it will not provide any street lights.
b) The efficient quantity is 3 street lights per block because that is the quantity that equates the marginal social benefit to the marginal social cost.

Answer to Question 2

B

[MirandaLo]

Gracias!

[ktidd]

TYSM