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Asked Nov 5, 2019
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Step 1

A public good is a commodity or service provided to society without the motive of earning profit. They are provided for welfare in the economy either by government or by any other organization.

Police protection is considered a public good. So, for equilibrium of public good, marginal social cost is equated with marginal social benefit. The amount of public good provided is decided when marginal social benefit is equal to its marginal social cost.

Step 2

When marginal benefit provided in table is multiplied by the population of people who avail the public good, the marginal...

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Marginal social benefit (MB x10,000) 80,000 72,000 64,000 56,000 48,000 Number of police Marginal benefit Marginal social cost officers 1 8.00 60,000 60,000 60,000 60,000 60,000 60,000 2 7.20 3 6.40 4 5.60 4.80 6 4.00 40,000 32,000 60,000 7 3.20

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Welfare economics

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