2) …

For each of the following situations1) Heritage apartments has 100 residents who are concerned about security. The table below
gives the total cost of hiring a 24-hour security guard service as well as the marginal
benefit to each of the residents.
Total Cost
Marginal
Marginal
Number
per Day
Benefit
Benefit
of Guards
(S)
per Resident
to all Residents
(S)
(S)
300
10
600
4
W
900
2
4
1200
a) Why is the security guard a public good for the residents of Heritage
Apartments?
b) Why will zero guards be hired if each of the residents must act individually?
c) What is the optimal number of guards (allocationefficient number)? What is
the net benefit at the optimal number of guards?
d) Show that the net benefit is less for either one less guard or one more guard
than for the optimal number of guards.Microeconomics