Kris, Taylor and Max are the only three residents in a neighborhood. A public good that would benefit all of them has a one-time installation cost of $900. The value of the public good to each resident is shown in the table below. Any tax plan must be approved by simple majority.ResidentReservation PriceIncomeKris$100$1,000Taylor$200$5,000Max$700$6,000 If the government proposes to pay for the public good with a head tax of $300 per resident, then

A. Max will vote in favor of the tax, but Kris and Taylor will vote against it.
B. all three will vote in favor of the tax.
C. Max will vote against the tax, but Kris and Taylor will vote in favor of it.
D. all three residents will vote against the tax.


Answer: A

Economics

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The above figure shows supply and demand curves for apartment units in a large city. If the city government passes a law that establishes $350 per month as the legal maximum rent, deadweight loss occurs because

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Economics