Suppose that Timmy lives in a neighborhood where graffiti is common. People's cars and the sides of houses are oftenvandalized with graffitiIn response to the vandalism, the people in the neighborhood have proposed a voluntary community fund to pay for extrapolice patrols. There are 1000 people in Timmy's neighborhood, and each is recommended to contribute $10 a monthTimmy's car has recently been vandalized and he is concerned it may happen again. Although he believes that he will benefitfrom the extra police patrols, Timmy has decided to take a free-rider approachGiven his thinking, how much will Timmy contribute to the fund?Timmy's contribution: $Assume that the entire neighborhood has the same mentality as Timmy. What will occur?The rate of graffiti in the neighborhood will increase significantlyEveryone will contribute money towards the community fund, yielding higher rates of police patrol and less graffitiNo one will contribute to the community fund, resulting in no changesNone of the choices are correct

Externalities occur when the action(s) of an individual or a firm affects other individuals/firms…

Answered: Suppose that Timmy lives in a…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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