Use the following to answer questions:
-(Table: Marginal Benefit from Additional Streetlights) Look at the 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

Use the following to answer questions: 
-(Table: Marginal Benefit from Additional Streetlights) Look at the 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

Quizplus · Accepted Answer

The socially optimal number of streetlights is where the marginal benefit equals the marginal cost. If the marginal cost is $6, you would choose the number of streetlights where the marginal benefit is closest to $6 without being less.

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