### Problem 3: Pollution Clean-Up ProposalAssume a city of 1,000,000 people, 60% of whom are willing to pay $1 maximum (each) to clean up pollution. The rest of the population is wealthier and is willing to pay $100 each to clean up pollution. Pollution clean-up costs $2,000,000. It has been proposed that each person be taxed equally to pay for the pollution clean-up. **Questions for Consideration:**- **Majority-Rule Vote:** Will the proposal pass a majority-rule vote?- **Pareto Criterion:** Is the proposal desirable from the point of view of the Pareto criterion?- **Compensation Principle:** Is it a good idea, using the compensation principle?- **Social Choice Mechanism:** Which social choice mechanism do you think is best on intuitive grounds, and why?Explore these questions to understand the implications of different decision-making criteria in public goods funding.

Pareto Criterion:It states that an action or situation is desirable if it makes at least one person…

3. Assume a city of 1,000,000 people, 60% of whom are willing to pay $1 maximum (each) to clean up pollution. The rest of the population is wealthier and is willing to pay $100 each to clean up pollution. Pollution clean-up costs $2,000,000. It has been proposed that each person be taxed equally to pay for the pollution clean-up. Will that pass a majority-rule vote? Is it desirable from the point of view of the Pareto criterion? Is it a good idea, using the compensation principle? Which social choice mechanism do you think is best on intuitive grounds, and why?

3. Assume a city of 1,000,000 people, 60% of whom are willing to pay $1 maximum (each) to clean up pollution. The rest of the population is wealthier and is willing to pay $100 each to clean up pollution. Pollution clean-up costs $2,000,000. It has been proposed that each person be taxed equally to pay for the pollution clean-up. Will that pass a majority-rule vote? Is it desirable from the point of view of the Pareto criterion? Is it a good idea, using the compensation principle? Which social choice mechanism do you think is best on intuitive grounds, and why?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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