please do it on the excel spreadsheet
roblem Demonstration: Does the City Project Meet the Pareto Efficiency Criterion? Print Scenario Scenario Summary The allocation of resources relates to both business and government. State, local, and federal governments could use the Pareto efficiency criterion to measure the effectiveness of the government's reallocation of resources. A reallocation of resources is a potential Pareto improvement project if, and only if, the gains could potentially exceed the losses. K E Y P L AY E R S Name, Role Back to Top Stanley Ryan, your supervisor and accountant, in your consulting firm. Your Role/Assignment You and Stanley need to prepare a Pareto efficiency criterion for a city project. Use the available resources below to decide whether or not the project will produce desirable gains. Your Role/Assignment The City Public Works Project will cost $900,000 and will benefit 5 different sections of the city. The City Benefit and Cost Share per Section is listed in the table below: Section 1 2 3 4 5 City Benefit ($) 100,000 200,000 300,000 100,000 200,000 Cost Share ($) 75,000 250,000 350,000 50,000 100,000 If the total projected benefits exceed the total project cost, then the project is economically feasible. The project would meet the Pareto efficiency improvement criterion if the cost benefit for each section of the city exceeds the cost share. For example, Section 1 is met since the benefit of the section is greater than the cost share of $75,000. However, in Section 2, the City Project would not meet the Pareto criterion because the Cost Share exceeds the City Benefit. Thus, the City Project would be approved in a city-wide referendum by a majority vote, although only for Sections 1, 4, and 5, since Sections 2 and 3 do not meet the Pareto criterion. YOU DECIDE Activity With a total benefit of $900,000 for the city, and a total project cost of $825,000: 1. Is this project economically feasible for the city? 2. Does the project meet the Pareto efficiency improvement criterion? 3. Would this project be approved by a majority at a city referendum? YOU DECIDE Suggested Responses 1. The total projected benefits exceed the total project cost; therefore, the project is economically feasible. 2. Generally speaking, the project would meet the Pareto efficiency improvement criterion if the cost benefit for each section of the city exceeds the cost share. In this case, Section 1 is met since the benefit of the section is greater than the cost share of $75,000. However, in Section 2, the City Project would not meet the Pareto criterion because the Cost Share exceeds the City Benefit. 3. The City Project would be approved in a city-wide referendum by a majority vote, although only for Sections 1, 4, and 5, since Sections 2 and 3 do not meet the Pareto criterion
