Question #124739

Suppose that 10 people live on a street and that each of them is willing to pay GHS 2 for each extra streetlight, regardless of the number of streetlights provided. If the cost of providing x streetlights is given by 2 )( x xC , what is the Pareto efficient number of streetlights to provide?

Expert's answer

If the cost of providing x streetlights is given by C(x) = x^2, then the Pareto efficient number of streetlights to provide is:

x = 20 streetlights.

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