6. You are the mayor of a town with 20,000 residents. The headof your economic development agency recently conducted asurvey in which the 20,000 residents said that a small publiclibrary in the center of town would be worth $40 to each ofthem. The cost to build the library is $500,000. Which of thefollowing is the most efficient option?a. The library should be built and paid for with donationscollected from residents, as these donations should more thancover the cost of the library.b. The library should be built and paid for by the wealthiest tenpercent of the residents.c. The library should be built and paid for by the towngovernment and paid for with a tax on the residents because allresidents would benefit from it but some residents would notdonate if they were asked.d. The library should not be built.

Public goods are a set of those goods that are non-excludable along with non-rival in nature. It may…

6. You are the mayor of a town with 20,000 residents. The head of your economic development agency recently conducted a survey in which the 20,000 residents said that a small public library in the center of town would be worth $40 to each of them. The cost to build the library is $500,000. Which of the following is the most efficient option?

6. You are the mayor of a town with 20,000 residents. The head of your economic development agency recently conducted a survey in which the 20,000 residents said that a small public library in the center of town would be worth $40 to each of them. The cost to build the library is $500,000. Which of the following is the most efficient option?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

6. You are the mayor of a town with 20,000 residents. The head
of your economic development agency recently conducted a
survey in which the 20,000 residents said that a small public
library in the center of town would be worth $40 to each of
them. The cost to build the library is $500,000. Which of the
following is the most efficient option?
a. The library should be built and paid for with donations
collected from residents, as these donations should more than
cover the cost of the library.
b. The library should be built and paid for by the wealthiest ten
percent of the residents.
c. The library should be built and paid for by the town
government and paid for with a tax on the residents because all
residents would benefit from it but some residents would not
donate if they were asked.
d. The library should not be built.

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