Diane's Diamond Depot and Sean's Sock Shop are the only two stores in a small shopping center sharing a parking lot. The owner's are considering hiring a shared overnight security guard to patrol the parking lot. Assume the presence of a security guard in the parking lot will deter criminal activity to either store. Diane has very valuable inventory, and is very afraid of a break-in so she is willing to pay $700 per week for a security guard. Sean doesn't have as valuable of inventory, but is still concerned with break-ins or vandalism and is willing to pay $300 per week for a security guard. he cost to hire a security guard to patrol the lot is $800 per week. (a) Explain why the security guard can be considered a public good when we are only considering the two store owners as "the economy". Your answer should include the two characteristics of public goods and explain how they both fit this scenario.

Diane's Diamond Depot and Sean's Sock Shop are the only two stores in a small shopping center sharing a parking lot. The owner's are considering hiring a shared overnight security guard to patrol the parking lot. Assume the presence of a security guard in the parking lot will deter criminal activity to either store. Diane has very valuable inventory, and is very afraid of a break-in so she is willing to pay $700 per week for a security guard. Sean doesn't have as valuable of inventory, but is still concerned with break-ins or vandalism and is willing to pay $300 per week for a security guard. he cost to hire a security guard to patrol the lot is $800 per week. (a) Explain why the security guard can be considered a public good when we are only considering the two store owners as "the economy". Your answer should include the two characteristics of public goods and explain how they both fit this scenario.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter15: Strategic Games

Section: Chapter Questions

Problem 5MC

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