Guards patrolling a mall protect the mall’s two stores. The television store’s demand curve for guards is strictly greater at all prices than that of the ice-cream parlor. The marginal cost of a guard is $ 20 per hour. Use a diagram to show the equilibrium, and com-pare that to the socially optimal equilibrium. Now suppose that the mall’s owner will provide a $ s per hour subsidy per guard. Show in your graph the optimal s that leads to the socially optimal outcome for the two stores.
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