Question

In: Economics

In a four person community, we have elicited each individual’s willingness to pay to build an...

In a four person community, we have elicited each individual’s willingness to pay to build an additional mile of a bike lane. Whatever amount is constructed, the community will split the cost evenly.

Bike Lanes (miles)

Avery WTP ($)

Billy WTP ($)

Cedric WTP ($)

Doug WTP ($)

Total WTP ($)

1

42

39

25

12

118

2

36

30

20

9

95

3

30

21

15

6

72

4

24

12

10

3

49

5

18

3

5

0

26

1. Suppose bike lanes can be built for 52 $ . mi

(a) (1 point) What is the efficient amount of bike lanes to build?

(b) (1 point) Will the majority vote accept this proposal?

2. Suppose the bike lanes can be built for 84 $ . mi

(a) (1 point) What is the efficient amount of bike lanes to build?

(b) (1 point) Will the majority vote accept this proposal?

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