Refer to Figure 5-16. Suppose Amit and Bree know each other's preferences so that it is not possible for one to deceive the other
Which of the following statements best describes the circumstances under which the optimal quantity of street lights could be achieved?
A) The optimal quantity will be installed only if Bree pays for the entire installation cost.
B) The optimal quantity will be installed only if the two parties agree to pay according to their willingness to pay as indicated by their respective demand curves.
C) Because there are only two consumers, it is likely that private bargaining will result in the optimal quantity being installed.
D) The optimal quantity will be installed only if the two parties split the cost of installation equally.
C
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Economists use the term shocks to mean
A) unexpected government actions that affect the economy. B) typically unpredictable forces that have major impacts on the economy. C) sudden rises in oil prices. D) the business cycle.
Using the income approach, the smallest component in the calculation of GDP is:
a. net interest. b. rental income. c. profits. d. compensation of employees.