Question

Two towns, each with three members, are deciding whether to put on a fireworks display to celebrate the New Year. Fireworks cost $360. 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)
Tim	50
Alyssa	100
Brian	300

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 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.

Tim

Alyssa

Brian

The vote ____________ 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)
Crystal	20
Edison	140
Hilary	160

The total benefit of the fireworks display to the town of River Heights is ________

.

Therefore, fireworks ____________ 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.

Crystal

Edison

Hilary

The vote _______ 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.

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

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

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

Answer 1

Fireworks cost $360

a) In the town of Bayport, each of the residents values the public good as follows:

Resident	Value
	(Dollars)
Tim	50
Alyssa	100
Brian	300

The total benefit of the fireworks display to the town of Bayport is 50+100+300=450

.As the benefits are greater than the cost.

Therefore, fireworks will 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.i.e 360/3 = 120 each

Who would vote in favor of the fireworks referendum?.

Only Brian as only his benefits are more than the cost

The vote will not yield the same answer as the cost-benefit analysis.

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

Resident	Value
	(Dollars)
Crystal	20
Edison	140
Hilary	160

The total benefit of the fireworks display to the town of River Heights is 20+140+160=320

.As benefits are less than cost

Therefore, fireworks will 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.i.e 360/3 = 120

Who would vote in favor of the fireworks referendum?

Both Edison and Hilary as their benefits are more than the cost

The vote will 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.

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