(Table: Marginal Benefit from Additional Streetlights) Use Table: Marginal Benefit from Additional Streetlights.Suppose that the marginal cost of installing a streetlight is $6.What is the socially optimal number of streetlights in the neighborhood?

A) 1
B) 2
C) 3
D) 4

Question

Taylor Pechin · Accepted Answer

Final Answer : C, Explanation :  The socially optimal number of streetlights occurs where the marginal benefit equals the marginal cost. From the table, we can see that the marginal benefit of the first streetlight is $10, the marginal benefit of the second streetlight is $8, the marginal benefit of the third streetlight is $6, and the marginal benefit of the fourth streetlight is $4. Therefore, the socially optimal number of streetlights is 3, since the marginal benefit of installing a fourth streetlight is less than its marginal cost of $6.

(Table: Marginal Benefit from Additional Streetlights) Use Table: Marginal Benefit from Additional Streetlights.Suppose that the marginal cost of installing a streetlight is $6.What is the socially optimal number of streetlights in the neighborhood?

A) 1
B) 2
C) 3
D) 4

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Learning Objectives

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(Table: Marginal Benefit from Additional Streetlights) Use Table: Marginal Benefit from Additional Streetlights.Suppose that the marginal cost of installing a streetlight is $6.What is the socially optimal number of streetlights in the neighborhood?A) 1B) 2C) 3D) 4

Definitions

Learning Objectives

Learning Objectives

Related questions

(Table: Marginal Benefit from Additional Streetlights) Use Table: Marginal Benefit from Additional Streetlights.Suppose that the marginal cost of installing a streetlight is $6.What is the socially optimal number of streetlights in the neighborhood?

A) 1
B) 2
C) 3
D) 4