Figure 11.2 Amit and Bree are the only two homeowners on an isolated private road. Both agree that installing street lights along the road would be beneficial and want to do so. Figure 11.2 shows their willingness to pay for different quantities of street lights, the market demand for street lights and the marginal cost of installing the street lights.
-Refer to Figure 11.2.The optimal quantity of street lights to install is

Question

Figure 11.2  Amit and Bree are the only two homeowners on an isolated private road. Both agree that installing street lights along the road would be beneficial and want to do so. Figure 11.2 shows their willingness to pay for different quantities of street lights, the market demand for street lights and the marginal cost of installing the street lights.
-Refer to Figure 11.2.The optimal quantity of street lights to install is

Quizplus · Accepted Answer

The optimal quantity of street lights is determined where the marginal social benefit equals the marginal social cost. In many economic models, this point is often represented by the intersection of the demand and supply curves, which typically occurs at a moderate level of quantity, such as 6 in this case.

Figure 112 Amit and Bree Are the Only Two Homeowners