Suppose 100 townspeople value a statue of the local hero at $1 each, and construction of the statue would cost $90. Which of the following is true?
A)It would be efficient to build the statue, but it may not be built because some of the townspeople who value the statue will not contribute to its construction.
B)It would be efficient to build the statue and it will be built because at least ninety of the townspeople will contribute to its construction.
C)The statue will not be built because it is not efficient to build a statue that costs $90 if the townspeople value it at only $1.
D)The statue will not be built because the local government does not have the power to tax only those who value it.

Question

Quizplus · Accepted Answer

The total value the townspeople place on the statue ($100) exceeds the cost ($90), making it efficient to build. However, due to the free-rider problem, some may not contribute, risking the statue not being built.

Suppose 100 Townspeople Value a Statue of the Local Hero