What is the socially optimal length of the fireworks show

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Reference no: EM13188802

Two things enter each citizen's utility function; fireworks, and money left over to spend on things like food, shelter, etc. The mayor decides how long each fireworks show will last each year. This year, she has a new plan: each of the 20 town citizens will send in their marginal utility of a minute of fireworks to the mayor, who will then compute the optimal amount of fireworks and later bill each citizen for their share based on how much they enjoyed the show as measured by their reported marginal utility. Each citizen (i) has the following utility function:

U (sub-i) = (f,m) = i(sqrt(f)) + m i= 1...20

where f is the length of the fireworks show in minutes, and m represents the dollars left over. The marginal cost of a minute of fireworks show is $15. What is the socially optimal length of the fireworks show?

Reference no: EM13188802

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