Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

4. [15 marks] There are three individuals in a community: 1,2 and 3. Their valuations of the public good, G, are MB1 = 40 -

image text in transcribed
4. [15 marks] There are three individuals in a community: 1,2 and 3. Their valuations of the public good, G, are MB1 = 40 - 2G, MB2 = 20 - G and MB3 = 10 - G/2. Let MCG = ACG = 12. a. [5 marks] Calculate the efficient level of G. b. [5 marks] Suppose the individuals must vote to determine the level of G, assuming that each pays 1/3 of the cost. What will G be, according to the median voter theorem? Is this G efficient? Show your work. c. [5 marks] Suppose the individuals must vote to determine the level of G, assuming that person 3 pays all of the cost. What will G be, according to the median voter theorem? Is this G efficient? Show your work

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Economics The Basics

Authors: Michael Mandel

2nd Edition

0073523186, 9780073523187

More Books

Students also viewed these Economics questions

Question

Food supply

Answered: 1 week ago

Question

Mortality rate

Answered: 1 week ago