Question Six (worth five points)

Assume there is a river that runs past twenty homes and the river has a tendency to overflow its banks and flood the homes. Assume that at a cost of $200,000 that a dam can be built that will prevent the river from overflowing its banks. Assume that each homeowner would be willing to pay as much as $60,000 toward the construction of the dam. Explain to me what each individual homeowner thinks would be rational and why? Is it likely that the dam will be built? Why or why not? What could government do that would improve the overall outcome? Explain your reasoning.