Scenario 10-4 the Demand Curve for Fire Extinguishers Slopes Downward and the and the Supply

question 73

Essay

Scenario 10-4
The demand curve for fire extinguishers slopes downward and the supply curve for fire extinguishers slopes upward. The production of the 500^th fire extinguisher entails the following:
• a private cost of $10;
• an external cost of $0;
• a private value of $9;
• an external benefit of $3.
-Refer to Scenario 10-4. In order to maximize the total benefit of fire extinguishers to society as a whole, should the number of fire extinguishers produced be less than, equal to, or greater than 500? Explain.

---

Definitions:

Treasury Notes

Medium-term interest-bearing securities issued by the U.S. government with maturity terms typically between 2 to 10 years.

Initial Maturities

Refers to the initial period before a financial instrument or security matures or expires.

Commercial Paper

A short-term unsecured debt instrument issued by corporations to finance their immediate operational needs.

Unsecured Debt

A type of debt or general obligation that is not protected by a guarantor or collateralized by a lien on specific assets of the borrower.