Q4. Homeowners 1, 2, and 3 live at the end of a badly deteriorated road. Fixing the road would cost $C. The value to Homeowner 1 of xing the road is $4,000, the value to Homeowner 2 is $5,000, and the value to Homeowner 3 is $10,000. Each homeowner claims that xing the road is not worth much to him, because each wants the others to pay the eost. The local government suspects that the total value to these homeown ers of xing the road is greater than $0 and has decided to require the three homeowners to use the VCG mechanism to determine whether to x the road. Since the government had no idea of the individual values for xing the road, it decided to allocate the costs equally among the three homeowners. Each homeowner is asked to report his value for xing the road. If the sum of the reported values is greater than C, the road will be xed and each homeowner will have to pay $0 ,I" 3 and also will have to pay an additional tax as calculated by the VCG mechanism {GU tax scheme we studied). {a} Suppose that (3 $13, 511'), so that. each homevm-ner has to pay $4,500 as his share oF the crust. Explain what is going to happen. Report all calcuations. {h} Suppose that C = $18, 000 and so each homeowner will have to pay a $6,000 share of the cost. Explain what is going to happen. Report all calcuations. (e) Suppose that instead of 3 homeowners at the end of the road, there were 30 hotness-mere, 10 of type 1 who valued repairing the road at $4,000, 10 of type 2 who valued repairing the road at $5,000 and 10 of type 3 who valued repairing the road at $10,000. Suppose that the cost of repairing the road is C" = $180, 000. Explain what is going to happen. Report all calcuations