Scenario: Suppose there are only three houses on a street. The following table shows each homeowner's willingness to pay for street lights. It costs $700 to install a street light.

-Refer to the scenario above.The socially optimal number of street lights for this street is ________.
A) 0
B) 1
C) 2
D) 3

Question

Scenario: Suppose there are only three houses on a street. The following table shows each homeowner's willingness to pay for street lights. It costs $700 to install a street light.
 
-Refer to the scenario above.The socially optimal number of street lights for this street is ________.
A) 0 
B) 1 
C) 2 
D) 3

Quizplus · Accepted Answer

The socially optimal number of street lights would be determined by the point where the marginal social benefit of adding another street light equals the marginal social cost. Without specific data, it's challenging to provide a precise number, but option C (2) suggests a moderate level of provision that might balance these considerations, assuming a typical scenario where some lighting is necessary for safety and utility, but where additional lights offer diminishing returns or increased costs.

Scenario: Suppose There Are Only Three Houses on a Street