Ch 3, q3. 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 willing to pay $100each to clean up pollution. Pollution clean-up costs $2,000,000. It has been proposed thateach 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 ideausing the compensation principle? Which social choice mechanism do you think is best onintuitive grounds, and why?

For the first question, majority rule reflects the preferences of the majority. As you can see in…

Answered: Ch 3, q3. Assume a city of 1,000,000…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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