Thanks to a new federal program that will provide 50% matching funds, Fun City has decided to build a new
municipal water park with pools, water slides, and so forth. To build the water park, Fun City would have to purchase concrete from an essentially competitive market. As a result of this purchase, the price of concrete would increase slightly. Can the city's budgetary expenditure on concrete be appropriately used as the measure of the social value of the cost that would result from its purchase of concrete? Or is shadow-pricing necessary? Briefly explain. [In answering this question, demonstrate that you know what shadow pricing is and use a diagram to illustrate your discussion.]
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