Consider a town that is planning a firework festival during the Fourth of July night. It cost $360 to provide 10 minutes of fireworks. The marginal private benefits (MPB) the three residents are shown in the table below.

a. How do you know that firework is a public good?

b. What is the total benefit to all residents by providing 20 minutes of firework?

c. Draw the individual marginal benefits and the social marginal benefit.

d. What is the socially optimal level of fireworks?

Transcribed Image Text:

Person А ABU C MPB for the first 10 min 500 150 100 MPB for the next 10 min 280 110 90 MPB for the next 10 min 190 90 80 MPB for the next 10 min 100 70 50 Person А ABU C MPB for the first 10 min 500 150 100 MPB for the next 10 min 280 110 90 MPB for the next 10 min 190 90 80 MPB for the next 10 min 100 70 50

Answer rating: 100% (QA)

a The firework can be enjoyed by any residents or people to whom it may be visible and ... View the full answer