Question

Toilets in shopping mall are free of charge. Would this lead to optimal level of usage of the toilets? Is this arrangement economically inefficient? (Try to compare with the case that the landlord post a charge for toilet in usage.)

Answer 1

This will lead to an optimal usage as toilets will only be used when they are required. So there will not be any overconsumption even though it's free. This is similar to air. Humans have a fixed requirement of air. Even though it's free, it is not exploited.

This might not be economically efficient as the mall owner can extract surplus by charging customers a nominal fee for toilet usage. Construction of toilet requires space, ehiwh could have been rented out to a shop. So a toilet has an opportunity cost. So this is not economically efficient