Use the following to answer question:
-(Table: Marginal Benefit from Additional Streetlights)Use Table: Marginal Benefit from Additional Streetlights.Suppose that the marginal cost of installing a streetlight is $6.If Dave had to pay for streetlights on his own,how many streetlights would there be?
A)0
B)1
C)2

Question

Use the following to answer question: 
-(Table: Marginal Benefit from Additional Streetlights)Use Table: Marginal Benefit from Additional Streetlights.Suppose that the marginal cost of installing a streetlight is $6.If Dave had to pay for streetlights on his own,how many streetlights would there be?
A)0 
B)1 
C)2

Quizplus · Accepted Answer

From the table, we can see that the marginal benefit of the first streetlight is $20, the marginal benefit of the second streetlight is $14, and the marginal benefit of the third streetlight is $8. Since the marginal cost of installing a streetlight is $6, Dave would install the first streetlight, as it provides a marginal benefit of $20 for a cost of $6. He would also install the second streetlight, as it provides a marginal benefit of $14 for a cost of $6. However, he would not install the third streetlight, as it only provides a marginal benefit of $8 for a cost of $6, which does not outweigh the cost. Therefore, the answer is C) 2 streetlights.

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