Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A local government decides to use a Groves Clark mechanism to decide whether it should build a park or not. There are 150 families

 

A local government decides to use a Groves Clark mechanism to decide whether it should build a park or not. There are 150 families who might benefit from the presence of the park. 50 of the families are dog walkers who value the park at 20. 50 of the families have young children who value the park at 10. 50 of the families have neither dogs nor children and value the park at 2. (a) If it costs c to build the park, what values of c is it efficient for the park to be built? (b) For each value 0 c 2000 describe how much money the council raises from the Groves- Clark mechanism. (c) What is the maximum that is raised by the mechanism?

Step by Step Solution

3.48 Rating (158 Votes )

There are 3 Steps involved in it

Step: 1

a To determine if it is efficient to build the park we need to compare the total value of the park t... 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_2

Step: 3

blur-text-image_3

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

The Economics Of The Environment

Authors: Peter Berck, Gloria Helfand

1st Edition

978-0321321664, 0321321669

Students also viewed these Accounting questions