A local jurisdiction is (a la Tiebout) populated with 125 households who have identical demands for a local public good G that can be expressed as G ¼ 100 0:5 p;

where p is the price per unit of the public good. Each unit of the public good costs

$5,000, and each household pays pG in taxes.

a. What is the price per unit of the public good?

b. What is the optimal amount of the public good for this jurisdiction?

c. How much will each household pay in taxes?