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Socially 0ptimal Level
How does this compare to the socially optimal level of provision? The social optimum is the quantity at which the sum of the individuals' marginal rates of substitution equals the ratio of prices (which is 1 in this example). Each individual's 
MRS is the ratio of his marginal utility of fireworks to his marginal utility of private goods, which we obtain by differentiating the previous utility function with respect to fireworks and then again with respect to private goods. So the optimal amount of fireworks is determined by:

(100-F_(B))//[2×(F_(B)+F_(J))]+(100-F_(j))//[2×(F_(B)+F_(j))]=1
Using the fact that total fireworks 
F=F_(B)+F_(beta) we can rewrite this equation as:

(200-F)//2F=1
Solving this, we obtain 
F=66.6. This quantity is much higher than the total provision by the private market, 40 , due to the free rider problem. The public good is underprovided by the private market.

Socially 00ptimal Level\newlineHow does this compare to the socially optimal level of provision? The social optimum is the quantity at which the sum of the individuals' marginal rates of substitution equals the ratio of prices (which is 11 in this example). Each individual's MRS M R S is the ratio of his marginal utility of fireworks to his marginal utility of private goods, which we obtain by differentiating the previous utility function with respect to fireworks and then again with respect to private goods. So the optimal amount of fireworks is determined by:\newline(100FB)/[2×(FB+FJ)]+(100Fj)/[2×(FB+Fj)]=1 \left(100-F_{B}\right) /\left[2 \times\left(F_{B}+F_{J}\right)\right]+\left(100-F_{j}\right) /\left[2 \times\left(F_{B}+F_{j}\right)\right]=1 \newlineUsing the fact that total fireworks F=FB+Fβ F=F_{B}+F_{\beta} we can rewrite this equation as:\newline(200F)/2F=1 (200-F) / 2 F=1 \newlineSolving this, we obtain F=66.6 F=66.6 . This quantity is much higher than the total provision by the private market, 4040 , due to the free rider problem. The public good is underprovided by the private market.

Full solution

Q. Socially 00ptimal Level\newlineHow does this compare to the socially optimal level of provision? The social optimum is the quantity at which the sum of the individuals' marginal rates of substitution equals the ratio of prices (which is 11 in this example). Each individual's MRS M R S is the ratio of his marginal utility of fireworks to his marginal utility of private goods, which we obtain by differentiating the previous utility function with respect to fireworks and then again with respect to private goods. So the optimal amount of fireworks is determined by:\newline(100FB)/[2×(FB+FJ)]+(100Fj)/[2×(FB+Fj)]=1 \left(100-F_{B}\right) /\left[2 \times\left(F_{B}+F_{J}\right)\right]+\left(100-F_{j}\right) /\left[2 \times\left(F_{B}+F_{j}\right)\right]=1 \newlineUsing the fact that total fireworks F=FB+Fβ F=F_{B}+F_{\beta} we can rewrite this equation as:\newline(200F)/2F=1 (200-F) / 2 F=1 \newlineSolving this, we obtain F=66.6 F=66.6 . This quantity is much higher than the total provision by the private market, 4040 , due to the free rider problem. The public good is underprovided by the private market.
  1. Understand the equation: Understand the equation for the social optimum.\newlineThe social optimum is where the sum of the individuals' marginal rates of substitution (MRS) equals the ratio of prices. In this case, the ratio of prices is 11. The MRS for each individual is given by the ratio of the marginal utility of fireworks to the marginal utility of private goods. The equation provided is:\newline100FB2×(FB+FJ)+100Fj2×(FB+Fj)=1\frac{100-F_{B}}{2\times(F_{B}+F_{J})}+\frac{100-F_{j}}{2\times(F_{B}+F_{j})}=1\newlineWe need to solve this equation to find the optimal amount of fireworks, FF.
  2. Simplify the equation: Simplify the equation using the fact that total fireworks FF is the sum of FBF_{B} and FJF_{J}. We are given that F=FB+FJF = F_{B} + F_{J}. We can substitute this into the equation to simplify it:\newline200F2F=1\frac{200-F}{2F}=1\newlineThis equation represents the sum of the individuals' MRS and sets it equal to the ratio of prices, which is 11.
  3. Solve for F: Solve the simplified equation for F.\newlineWe have the equation:\newline(200F)/2F=1(200-F)/2F=1\newlineTo solve for F, we multiply both sides by 2F2F to get rid of the denominator:\newline200F=2F200-F = 2F\newlineNow, we add FF to both sides to isolate terms with FF on one side:\newline200=3F200 = 3F\newlineNext, we divide both sides by 33 to solve for FF:\newlineF=200/3F = 200/3
  4. Calculate F: Calculate the value of FF. Now we perform the division: F=2003F = \frac{200}{3} F66.67F \approx 66.67 This is the socially optimal level of fireworks provision.

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