(Scenario: Positive Externalities with Community Lawns) Use Scenario: Positive Externalities with Community Lawns. City officials estimate that the marginal benefit to visitors of lawn upkeep is $15. Given this information, what is the socially optimal amount of lawn upkeep in this community? Scenario: Positive Externalities with Community Lawns The town of Port Townsend in Washington finds that well-tended lawns provide both private and external benefits. The marginal private benefit (MPB) of lawn upkeep is MPB = 50 - 0.5Q, where Q is the number of hours spent tending to lawns. The marginal private cost (MPC) of lawn upkeep is MPC = 0.5Q, where Q is again the number of hours spent tending to lawns. a. 0 hours b. 45 hours c. 50 hours d. 65 hours
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Social optimality occurs at the point where the marginal social benefit (MSB) equals the marginal social cost (MSC). In this scenario, the MSB includes both the marginal private benefit (MPB) of lawn upkeep and the marginal external benefit to visitors, while the Show moreā¦
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