2. Suppose that there are 1,000 voters in your city. A total of 400 are willing to pay up to $25 each for the construction of a park, and the other 600 are willing to pay only $10. The construction of the park will cost $12,000. Someone proposes a vote on whether to tax each citizen $12 in order to finance the park. (a) What will be the result according to the median voter model? Is this result socially efficient? Explain. (b) What if instead of being willing to pay up to $25 each, the 400 residents were willing to pay up to $50 each?

2. Suppose that there are 1,000 voters in your city. A total of 400 are willing to pay up to $25 each for the construction of a park, and the other 600 are willing to pay only $10. The construction of the park will cost $12,000. Someone proposes a vote on whether to tax each citizen $12 in order to finance the park. (a) What will be the result according to the median voter model? Is this result socially efficient? Explain. (b) What if instead of being willing to pay up to $25 each, the 400 residents were willing to pay up to $50 each?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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