Figure 5-8 Amit and Bree Are the Only Two

question 69

Multiple Choice

Figure 5-8 Amit and Bree are the only two homeowners on an isolated private road.Both agree that installing street lights along the road would be beneficial and want to do so.Figure 5-8 shows their willingness to pay for different quantities of street lights,the market demand for street lights and the marginal cost of installing the street lights.
-Refer to Figure 5-8.Suppose Amit and Bree know each other's preferences so that it is not possible for one to deceive the other.Which of the following statements best describes the circumstances under which the optimal quantity of street lights could be achieved?

• A)The optimal quantity will be installed only if the two parties agree to pay according to their willingness to pay as indicated by their respective demand curves.
• B)Because there are only two consumers,it is likely that private bargaining will result in the optimal quantity being installed.
• C)The optimal quantity will be installed only if the two parties split the cost of installation equally.
• D)The optimal quantity will be installed only if Bree pays for the entire installation cost.

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Definitions:

Obstructionist Strategy

A corporate approach where a company takes actions to block or delay certain policies or initiatives, often for strategic or competitive reasons.

Social Responsibility

The obligation of individuals, groups, or entities to act for the benefit of society at large, often evidenced by sustainable practices, philanthropy, and ethical behavior.

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The lowest standard of behavior expected of individuals or organizations, based on ethical principles and societal norms.