Guildford Borough Council has decided to extend the swimming lanes of Guildford Lido. The borough council plans to finance the extension from contributions of two types of individuals: Ordinary residents of Guildford (R) and students at the University of Surrey (S), temporarily resident in Guildford. R and S have a utility function over private goods and the total number of additional swimming lanes (L), of the form: Ui (xi,L) = (xi-3)(L-4) The total number of additional swimming lanes, is the sum of the number of swimming lanes funded by each type of individuals, ordinary residents and student residents: L = ls + lr . Ordinary residents have an income of £11 and students have an income of £5. Both, the private good and using a swimming lane have a price of £1. How many swimming lanes will be built if Guildford Borough Council does not intervene? How many are paid for by both types of individuals, the ordinary residents and student residents?
