Attempts 9 Market efficiency and market failure Suppose that

Attempts 9. Market efficiency and market failure Suppose that the follawing graph shows a free market eqlbrim, with QE as the equilibrium quantity. Kecp the Highest: 2 Suppty Demand For an output level below Qs. the value of a unit to buyer is the cost or ? unit to seller. Suppose a firm thst produces for this market emplays- private security force that makes town residents, many of whom have no business with the

Solution

For the output level QE, the value of a unit to the buyer is equal to the cost of a unit to the seller.

The hiring of a private security force is characterized by free rider problem, wich is an example of a public good.