The small city of Pleasantville is considering building a public swimming pool that costs $1,000. Each resident's marginal benefit of the swimming pool is shown below. It takes a 4/5 majority to pass any tax measure, and all residents must vote. VoterMarginal BenefitKyle$420Dylan$360Fran$350Ronnie$190Sam$170 Kyle proposes that the city auction the right to build the pool to the highest-bidding company. The winning company would be able to charge residents a one-time fee to use the pool as much as they like, and only residents who pay the fee would be allowed to use the pool. If the private company could perfectly price discriminate, then:
A. no private company would bid on the right to build the pool.
B. a private company would be willing to bid up to $1,000 to build the pool.
C. a private company would be willing to bid up to $1,490 to build the pool.
D. a private company would be willing to bid up to $490 to build the pool.
Answer: D
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