What is the optimal number of streetlights for this block

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Reference no: EM131104479

The 1900 block of Kenyon St NW (my former home) has (approximately) 60 homes. 30 of the households really love streetlights, and each have a demand of QD = 10 − .5P.The other 30 households each have a demand of QD = 5 − .25P. Streetlights have a constant marginal cost of $120. (a) What is the optimal number of streetlights for this block? (b) Now, there is a ballot referendum on the streetlights. The options are “no street- lights” or “the optimal number of streetlights (as solved for above), with the total cost evenly distributed across all 60 homes.” Who votes yes to this o?er, and who votes no? (Note: this is pretty hard. In fact, it requires thinking not at the margin, but over the whole quantity. The key is answering the question “What is the value to the individuals of this number of lights?”)

Reference no: EM131104479

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