.homework 3. - SPEA V371-Financing Public Affairs...

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SPEA V371-Financing Public Affairs Homework #3 1.) a. If the marginal social cost is $2000, what is the efficient output assuming it is a pure private good? Alice Ben Carolyn Don Total Quantity 0 0 0 0 0 b. Suppose the service is a pure public good. What is the marginal social benefit of each unit of the service? Quantity ∑MB 1 2800 2 2000 3 1300 4 750 c. If the marginal social cost is $2000, what is the efficient output assuming it is a pure public good? QUANTITY MC ∑MB 1 2000 2800 2 2000 2000 3 2000 1300 4 2000 750 It is a pure public good at unit #2. 2.) Residents Number of Gardener 1 2 3 4 Mike 375 275 225 175 Jan 225 150 75 0 Franklin 100 75 25 0 Susan 75 50 25 0 Megan 50 25 0 0 a. How many gardeners would be hired? 1 b. Socially efficient number of gardeners: 4
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Unformatted text preview: c. Tax share o± $70, gardeners that will be hired under majority rule would be 3 d. I± tax share o± $70 were assigned , gardeners would be hired under unanimous consent 4 e. Under Lindahl pricing, the tax shares ±or each resident would be Mike 70 Jan 70 Franklin 70 Susan 70 Megan 70 f. Gardeners hired under Lindahl pricing tax shares would be : 4 3.) a. b. Residents Alice Ben Carolyn Tax share $150 Fireworks 100 / No 200 / Yes 75 / No Tax share $150 Security System 250 / Yes 125 /No 100 / No d. The outcome would be Alice Y Ben Y Carolyn N...
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  • Spring '16
  • BradleyHeim
  • Public Good, Externality, marginal social cost, tax share, Alice Y

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