Question: Two firms share a building. Guards patrolling the building protect both the stores. The jewelrystore's demand curve for guards is strictly greater at all prices than that of the hat store. Themarginal cost of a guard is $10 per hour.
Use a diagram to show the equilibrium and compare that to the socially optimal equilibrium.
Now suppose that the owner of the building willprovide a $s per hour subsidy per guard.
Show in your graph the s that leads to the sociallyoptimal outcome for the two stores.