Explain how affirmative and negative majority votes can sometimes lead to inefficient allocations of resources to public goods. Is this problem likely to be greater under a benefits-received or under an ability-to-pay tax system? Use the information in Figures 17.1a and 17.1b to show how society might be better off if Adams were allowed to buy votes. FIGURE 17.1 Inefficient votingoutcomes. Majority voting can produceinefficient decisions. (a) Majority voting leadsto rejection of a public good that would entaila greater total benefit than total cost.(b) Majority voting results in acceptance ofa public good that has a higher total cost thantotal benefit.Total benefit = $1150Total cost = $900Total benefit = $800Total cost = $900$700Adams$300$300per-per-personpersontaxtax$350$350$300$300$250BensonConrad$200BensonConrad$100Adams(Votes)o(Yes)(No)(No)(No)(Yes)(Yes)(a)Inefficient majority “no" vote(Ь)Inefficient majority "yes" voteBenefit; TaxBenefit; Tax

The affirmative majority votes are one in which the majority of people vote ‘yes’ for some public…

Answered: FIGURE 17.1 Inefficient voting…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Explain how affirmative and negative majority votes can sometimes lead to inefficient allocations of resources to public goods. Is this problem likely to be greater under a benefits-received or under an ability-to-pay tax system? Use the information in Figures 17.1a and 17.1b to show how society might be better off if Adams were allowed to buy votes.

FIGURE 17.1 Inefficient voting
outcomes. Majority voting can produce
inefficient decisions. (a) Majority voting leads
to rejection of a public good that would entail
a greater total benefit than total cost.
(b) Majority voting results in acceptance of
a public good that has a higher total cost than
total benefit.
Total benefit = $1150
Total cost = $900
Total benefit = $800
Total cost = $900
$700
Adams
$300
$300
per-
per-
person
person
tax
tax
$350
$350
$300
$300
$250
Benson
Conrad
$200
Benson
Conrad
$100
Adams
(Votes)o
(Yes)
(No)
(No)
(No)
(Yes)
(Yes)
(a)
Inefficient majority “no" vote
(Ь)
Inefficient majority "yes" vote
Benefit; Tax
Benefit; Tax

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