Summer open-air concerts are pure public good

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Summer open-air concerts are a pure public good in the small town of Mineral Point. The marginal social cost of each concert per night is constant at $500.

a. Explain why it would be inefficient to require each resident of Mineral Point to hire their own orchestra at the $500 rate for each concert.

b. Assuming that the marginal benefit of the first concert is $25 for each of the 1000 residents of Mineral Point, demonstrate that it will be efficient to have more than one concert per summer.

Reference no: EM131388852

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