2. The Parks and Recreation Department of Pawnee is trying to decide on the number of fireworks shows for the summer of

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2 The Parks And Recreation Department Of Pawnee Is Trying To Decide On The Number Of Fireworks Shows For The Summer Of 1 (188.78 KiB) Viewed 38 times

2. The Parks and Recreation Department of Pawnee is trying to decide on the number of fireworks shows for the summer of 2022. The cost of each fireworks show is $50. Pawnee has 10 residents and each have the same willingness to pay, which is decreasing in the number of fireworks shows q: 8-9. (You can ignore the effects of the free rider problem below.) a. What is the social marginal benefit of fireworks shows? [4 points] b. What is the social optimal number of fireworks shows? [4 points] April Ludgate proposes that the Parks and Recreation Department should just let the market determine the number of fireworks shows and be done with it. c. What is the market demand for fireworks shows? [4 points] d. What is the market equilibrium number of fireworks shows? [4 points] Ben Wyatt proposes that the Parks and Recreation Department should provide a subsidy for fireworks. e. What is the optimal subsidy that implements the social optimum? [4 points]