Two towns, each with three members, are deciding whether to put on a fireworks d

Question

Two towns, each with three members, are deciding whether to put on a fireworks display to celebrate the New Year. Fireworks cost $300. In each town, some people enjoy fireworks more than others. In the town of Bayport, each of the residents values the public good as follows: Value Resident (Dollars) Kenji Lucia Paolo 70 90 150 The total benefit of the fireworks display to the town of Bayport is $ Therefore, fireworks pass the cost-benefit analysis in the town of Bayport. The mayor of Baypor Would not decide by majority rule and, if the fireworks referendum passes, to split the cost equally among all residents. would Who would vote in favtne eworks referendum? Check all that apply. Kenji Lucia Paolo

Explanation / Answer

1. Total benefit = 70 + 90 + 150 = $ 310

2. Would

3. When cost is equally distributed then all have to pay $ 100

So, Paolo will only vote for it.

4. Does not

5. Total benefit = 50 + 110 + 120 = $ 280

6. Would not

7. Van and Amy vote for it.

8. Does not

9. Majority rule is the most efficient way to determine the amount of public goods a society should produce.

It is hard for the government to decide the appropriate amount of the public goods to produce because people have differing preferences regarding such goods.

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