2. Consider the figure below showing the situation of Mr. P, a property-tax "free-rider," in Wilmette, Illinois (a suburb of Chicago) where everyone else is an R. Assume c=600, a=0.5. z are pure public goods. *=100, z'=300 and z*R=500. There are 100 taxpayers in Wilmette. 100 ac 88 100 R T S DR DP zp Z' ZR Z a. How much public good z is provided in Wilmette? What is the tax-price for Mr. R? How much is Mr. R's tax bill? b. What is Mr. P's tax-price if he lives in Wilmette? What is his tax bill if he lives in Wilmette? c. If Mr. P lives in North Chicago, another suburb of Chicago made up 100 P's, how much public good z would he be provided? How much would his tax bill be? d. By living in Wilmette, Mr. P enjoys how much more or less consumer surplus than he would in North Chicago? Try to be quantitative.
2. Consider the figure below showing the situation of Mr. P, a property-tax "free-rider," in Wilmette, Illinois (a suburb of Chicago) where everyone else is an R. Assume c=600, a=0.5. z are pure public goods. *=100, z'=300 and z*R=500. There are 100 taxpayers in Wilmette. 100 ac 88 100 R T S DR DP zp Z' ZR Z a. How much public good z is provided in Wilmette? What is the tax-price for Mr. R? How much is Mr. R's tax bill? b. What is Mr. P's tax-price if he lives in Wilmette? What is his tax bill if he lives in Wilmette? c. If Mr. P lives in North Chicago, another suburb of Chicago made up 100 P's, how much public good z would he be provided? How much would his tax bill be? d. By living in Wilmette, Mr. P enjoys how much more or less consumer surplus than he would in North Chicago? Try to be quantitative.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:2. Consider the figure below showing the situation of Mr. P, a property-tax "free-rider,"
in Wilmette, Illinois (a suburb of Chicago) where everyone else is an R. Assume c=600,
a=0.5. z are pure public goods. *=100, z'=300 and z*R=500. There are 100 taxpayers
in Wilmette.
100
ac
88
100
R
T
S
DR
DP
zp
Z'
ZR
Z
a.
How much public good z is provided in Wilmette? What is the tax-price for
Mr. R? How much is Mr. R's tax bill?
b. What is Mr. P's tax-price if he lives in Wilmette? What is his tax bill if he
lives in Wilmette?
c. If Mr. P lives in North Chicago, another suburb of Chicago made up 100 P's,
how much public good z would he be provided? How much would his tax bill
be?
d. By living in Wilmette, Mr. P enjoys how much more or less consumer surplus
than he would in North Chicago? Try to be quantitative.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education