Question

Table 11-2

Consider a small town with only three families, the Greene family, the Brown family, and the Black family. The town does not currently have any streetlights, so it is very dark at night. The three families are considering putting in streetlights on Main Street and are trying to determine how many lights to install. The table below shows each family's willingness to pay for each streetlight.

Number of Streetlights	The Greene Family	The Brown Family	The Black Family
1	$340	$480	$420
2	260	380	400
3	160	260	340
4	40	130	240
5	0	50	100
6	0	0	20

A. Suppose the cost to install each streetlight is $360. How many streetlights should the town install to maximize total surplus from the streetlights?

    (a) 3 streetlights

    (b) 1 streetlight

    (c) 2 streetlights

    (d) 4 streetlights

B. Suppose the cost to install each streetlight is $900, and the families have agreed to split the cost of the streetlights equally. If the families vote to determine the number of streetlights to install, basing their decision solely on their own willingness to pay (and trying to maximize their own surplus), what is the greatest number of streetlights for which the majority of families would vote yes?

    (a) 2 streetlights

    (b) 1 streetlight

    (c) 4 streetlights

    (d) 3 streetlights