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Homework answers / question archive / There are two individuals with demand for streetlights (Q_1)^D= 150 - P and (Q_2)^D = 200 - P

There are two individuals with demand for streetlights (Q_1)^D= 150 - P and (Q_2)^D = 200 - P

Marketing

There are two individuals with demand for streetlights (Q_1)^D= 150 - P and (Q_2)^D = 200 - P. The market supply of streetlights is perfectly elastic at P =130.

a. What is the price and quantity of streetlights if the market is competitive?

b. Explain why streetlights are a public good.

c. What is the socially optimal price and quantity of streetlights?

d. Using your results, why is a public good considered a market failure?

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