There are 20 residents in the village of Towneburg. The size of the village's annual fireworks display depends upon the number of shells that are fired off. Each resident's demand for fireworks is shown below. The total cost of the fireworks display is $1,000 plus $10 per shell. If Towneburg's fireworks display has 20 shells, then the size of the display is:

Question

There are 20 residents in the village of Towneburg. The size of the village's annual fireworks display depends upon the number of shells that are fired off. Each resident's demand for fireworks is shown below. The total cost of the fireworks display is $1,000 plus $10 per shell.  If Towneburg's fireworks display has 20 shells, then the size of the display is:

Quizplus · Accepted Answer

The marginal cost of each shell is $10, and the marginal benefit of the 20ᵗʰ shell is $10 × 20 = $200. Since the marginal benefit of the 20ᵗʰ shell is greater than the marginal cost of the 20ᵗʰ shell, 20 shells is smaller than optimal.

There Are 20 Residents in the Village of Towneburg