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# Economics question help! Watch

1. 3 people enjoy seeing fireworks:
Elmer's demand: P = 20 - Q
Ethel's demand: P = 10 - 0.6Q
Edith's demand: P = 10 - 0.4Q

Fireworks displays are a public good i.e. non-rival ad non-excludable. Fireworks are produced and sold competitively at a constant marginal cost = average cost = £18 per firework

1) The town mayor decides to maximize the social welfare associated with fireworks He puts on a display with:
a) 0 fireworks
b. 1 firework
c. 2 fireworks
d. 4 fireworks
e. 10 fireworks
f. 11 fireworks
g. 12 fireworks
h. 14 fireworks
i. none of the above

2) If the town mayor puts on a display that maximises the scial welfare associated with fireworks, total social surplus (in £) will be given by:
a. 0
b. 2
c. 4
d. 40
e. 76
f. 121
g. 198
h. 400
i. none of the above

3) say the town mayor does not put on a public fireworks display, and each citizen buys fireworks themselves, maximising their own individual utility. the town will end seeing a total of:
a. 0 fireworks
b. 1 firework
c. 2 fireworks
e. 10 fireworks
f. 11 fireworks
g. 12 fireworks
h. 14 fireworks
i. none of the above

4) say the town mayor does not put on a public fireworks displau and each citizen buys fireworks themselves, maximising their own individual utility. the town's total consumer surplus (in £) from the resulting display of fireworks will be given by:
a. 0
b. 2
c. 4
d. 40
e. 76
f. 121
g. 198
h. 400
i. none of the above
2. draw a graph

what is special about this kind of good that allows you to sum the demand curves differently from private goods?

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Updated: December 5, 2010
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