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Economics

Two firms share a building. Guards patrolling the building protect both the stores. The jewelrystore's demand curve for guards is strictly greater at all prices than that of the hat store. Themarginal cost of a guard is $10 per hour.

Use a diagram to show the equilibrium and comparethat to the socially optimal equilibrium.

Now suppose that the owner of the building willprovide a $s per hour subsidy per guard.

Show in your graph the s that leads to the sociallyoptimal outcome for the two stores.

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Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M92634226

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