Show the equilibrium and compare

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Question: Two firms share a building. Guards patrolling the building protect both the stores. The jewelrystore's demand curve for guards is strictly greater at all prices than that of the hat store. Themarginal cost of a guard is $10 per hour.

Use a diagram to show the equilibrium and compare that to the socially optimal equilibrium.

Now suppose that the owner of the building willprovide a $s per hour subsidy per guard.

Show in your graph the s that leads to the sociallyoptimal outcome for the two stores.

Reference no: EM132149047

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