Attractive landscaping increases the property values of surrounding homes, creating a marginal benefit. The figure above represents the market for monthly landscaping contracts
a) What is the marginal social benefit of the 40th contract? Of the 60th contract? b) What is the marginal private benefit of the 40th contract? c) What is the marginal external benefit of the 40th contract? d) What is the unregulated competitive equilibrium price and quantity? e) What is the efficient quantity? f) What is the amount of the deadweight loss?
a) The marginal social benefit of the 40th contract is $100. The marginal social benefit of the 60th contract is $80.
b) The marginal private benefit of the 40th contract is $60.
c) The marginal external benefit of the 40th contract is $40.
d) The equilibrium price is $60 per contract and the equilibrium quantity is 40 contracts a month.
e) The efficient quantity is 60 contracts a month.
f) The deadweight loss equals $400 per month.
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