A public good that would benefit Karen,Tammy,and Max has a one-time installation cost of $900.These three voters must approve any tax plan by a simple majority and all three will cast a vote.
-Refer to the information above.Suppose that the government proposes a proportional income tax of 8%.The result of the referendum will be that

Question

A public good that would benefit Karen,Tammy,and Max has a one-time installation cost of $900.These three voters must approve any tax plan by a simple majority and all three will cast a vote. 
-Refer to the information above.Suppose that the government proposes a proportional income tax of 8%.The result of the referendum will be that

Quizplus · Accepted Answer

The installation cost is a sunk cost, so the decision should be based on the ongoing costs and benefits. If the tax is implemented, Karen and Max will benefit from the public good, and Tammy will bear the cost but not enjoy the benefits. Since the income tax is proportional, Tammy will pay a higher amount of tax compared to Karen and Max. Hence, Karen and Max will vote for the tax, and Tammy will vote against it. This results in a simple majority of 2-1 in favor of the tax, and the public good will be provided.

A Public Good That Would Benefit Karen,Tammy,and Max Has a One-Time