Question 5: Public Good Provision in Two Jurisdictions (15 points) Consider two homogeneous jmisdictions, one of which contains rich consumers {type 1), who are high demanders of the public good z, while the other contains poor consumers (type 2), who are low demanders. The demand curves for the types are given by D1 = 6 z and D2 = 4 z. The public good is nanced by a property tax in each jurisdiction, but since the jurisdictions are homogeneous, the property tax is equivalent to a head tax. The level of z is decided by majority vote. Suppose that days, the per capita cost of a unit of 2, equals 3 in each jurisdiction. 5.1 (3 points} Find the public good level in each jurisdiction, and illustrate the levels in a diagram. Show the surplus levels for both types of conslnners. Now consider what happens if one poor consumer moves into the rich jurisdiction. Because the poor consumer buys a small house, his cost per unit of: is lower than 3. Using some algebra, it can be shown that the cost per unit of z for the poor consumer equals qufql, where 4'2 gives the size of a poor consumer's house and q] gives the size of a rich consumer's house. Since .92