Assume that Abby, Ben, Clara, Joe, and Matt are the only citizens in a community. A proposed public good has a total cost of $1,000. All ﬁve citizens will share an equal portion of this cost in taxes. The beneﬁt of the public
Good is $220 to Abby, $210 to Ben, $210 to Clara, $180 to Joe, and $120 to Matt. In a majority vote, this
Proposal will most likely be
A) accepted; the public good is produced, even though it is economically ineﬃcient.
B) defeated; the public good is not produced, even though it would have been eﬃcient to do so.
C) accepted; the public good is produced, which is economically eﬃcient.
D) defeated; the public good is not produced, which is the proper outcome.

Question

Quizplus · Accepted Answer

The total benefit of the public good ($940) is less than its cost ($1,000), making it economically inefficient. However, since Abby, Ben, and Clara each receive a benefit greater than their equal share of the cost ($200), they are likely to vote in favor, leading to the proposal being accepted despite its inefficiency.

Assume That Abby, Ben, Clara, Joe, and Matt Are the Only