Suppose three neighbors must vote on the installation of a traffic light that costs $210. The cost of the light will shared by all three
Voter A values the light at $50; voter B values the light at $50; and voter C (who drives the most) values the light at $200. If the voting rule is that the majority wins, does the light get purchased? Is it efficient to purchase the light?
The cost of the light to each voter is $70. Since MC > MB for two of them, the light does not get purchased. It is efficient to purchase the light since SMB = 300 which exceeds the MC of 210.
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