9. There are two types of residents in a city: 70% low-income residents and 30% high- income residents. The government is considering two projects with same costs. If project A is taken, each low-income resident can save his transportation cost by $1,000 and each high-income resident can save his transportation cost by $750. If project B is taken, each low-income resident can save his transportation cost by $800 and each high-income resident can save his transportation cost by $1,350. If money is more important to low-income people than to high-income people, which project is better? Let the weights assigned to benefits and costs of low-income and high-income residents be w and 1, respectively. What values of w make project A better?

9. There are two types of residents in a city: 70% low-income residents and 30% high- income residents. The government is considering two projects with same costs. If project A is taken, each low-income resident can save his transportation cost by $1,000 and each high-income resident can save his transportation cost by $750. If project B is taken, each low-income resident can save his transportation cost by $800 and each high-income resident can save his transportation cost by $1,350. If money is more important to low-income people than to high-income people, which project is better? Let the weights assigned to benefits and costs of low-income and high-income residents be w and 1, respectively. What values of w make project A better?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter11: Public Goods And Common Resources

Section: Chapter Questions

Problem 10PA

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