Suppose that your university is considering building new parking lots on campus. The table that follows shows the marginal benefit to students, faculty/staff, and visitors for one to five new lots. The table also gives the total cost of acquiring/constructing those lots.

Assuming that the lots will not be completely full so that students, faculty/staff, and visitors can use them simultaneously, derive the aggregate demand curve or social marginal benefit for parking lots. What is the efficient number of additional lots? If this university builds the efficient number of lots, how should the costs be divided among students, faculty/staff, and visitors?

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Marginal benefits No. of lots 1234+5 Students Faculty/staff Visitors Total cost $75,000 $37,500 $12,500 $30,000 60,000 35,000 5,000 70,000 45,000 30,000 0 120,000 25,000 25,000 180,000 5,000 20,000 0 250,000