Suppose three neighbors must vote on the installation of a traffic light that costs $210. The cost of the light will be 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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The original rationale for government involvement in health care was _____
a. in helping to prevent and control contagious disease b. the dissemination of health care information c. the provision of health care insurance for the needy d. the provision of health care for the elderly
Drug-interdiction policies that reduce the supply of illegal drugs may
a. be more effective in the long run than in the short run. b. be best coupled with drug-education programs designed to reduce demand. c. increase drug-related crimes. d. All of the above are correct.
Antitrust laws have economic benefits that outweigh the costs if they
a. prevent mergers that would decrease competition and lower the costs of production. b. prevent mergers that would decrease competition and raise the costs of production. c. allow mergers that would decrease competition and raise the costs of production. d. None of the above is correct because antitrust laws never have economic benefits that outweigh the costs.
Luxury brands like designer sun glasses are goods that may exhibit snob effects. Suppose this is true, and the price for a particular brand increases. What happens to the component changes in the quantity demanded?
A. Pure price effect is positive, snob effect is negative. B. Pure price effect and snob effect are positive. C. Pure price effect is negative, snob effect is positive. D. Pure price effect and snob effect are negative.