6 . 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 $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)
Gilberto	50
Juanita	100
Lorenzo	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.

Gilberto

Juanita

Lorenzo

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)
Neha	20
Sam	140
Teresa	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.

Neha

Sam

Teresa

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.

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.

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