Construct argument showing how fireworks in pareto efficient

Reference no: EM132199034

Question: Consider the fireworks example from class on a public good.

a. Illustrate graphically and numerically why moving from the equilibrium quantity of 2 fireworks to the efficient quantity of 3 fireworks produces a potential Pareto improvement even if only one individual must always pay for the fireworks.

b. Now propose a cost sharing arrangement between the two individuals that creates a Pareto improvement when moving from the equilibrium to the efficient level.

c. Construct an argument showing how 3 fireworks in Pareto efficient.

Reference no: EM132199034

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