Question

7. Problems and Applications Q7

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:

Resident	Value
	(Dollars)
Darnell	70
Eleanor	90
Jacques	150

The total benefit of the fireworks display to the town of Bayport is ($ ).

Therefore, fireworks (would/would not) pass the cost-benefit analysis in the town of Bayport.

The mayor of Bayport proposes to decide by majority rule and, if the fireworks referendum passes, to split the cost equally among all residents.

Who would vote in favor of the fireworks referendum? Check all that apply.

Darnell

Eleanor

Jacques

The vote (would/would not) yield the same answer as the cost-benefit analysis.

In the town of River Heights, each of the residents values the public good as follows:

Resident	Value
	(Dollars)
Kyoko	50
Musashi	110
Rina	120

The total benefit of the fireworks display to the town of River Heights is ($ ).

Therefore, fireworks (would/would not)   pass the cost-benefit analysis in the town of River Heights.

The mayor of River Heights also proposes to decide by majority rule and, if the fireworks referendum passes, to split the cost equally among all residents.

Who would vote in favor of the fireworks referendum? Check all that apply.

Kyoko

Musashi

Rina

The vote (would/would not) yield the same answer as the cost-benefit analysis.

Which of the following statements is correct about the provision of public goods? Check all that apply.

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 public goods to produce because people have differing preferences regarding such goods.

The government always provides the exact types of public goods that everyone in the society wants.

Answer 1