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Larry, Max, Pat and Sam are colleagues working at the same office. They are planning to share and buy a coffee machine for the office.
Larry, Max, Pat and Sam are colleagues working at the same office. They are planning to share and buy a coffee machine for the office. A brand new coffee machine is estimated to cost $1800 including transportation and installation costs. Larry and Max are coffee lovers and are both willing to pay $600 each. Pat is willing to pay $450. Sam is more of a tea lover and is only willing to pay $200. Answer the following questions: a. Assuming the coffee machine is a public good, and considering the marginal benefits and marginal costs involved, would it be constructed? . Type Y for Yes or N for No. b. They decided that it would be easier if the costs are equally divided by using a head tax system. How much would Larry pay under a head tax system? $ Answer to the nearest whole dollar (with no decimal places). c. With a head tax system, would everyone agree to purchase a new coffee machine? Type Y for Yes or N for No
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