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
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