Suppose that the Anytown city government asks private citizens to donate money to support the town's annual holiday lighting display. Assuming that the citizens of Anytown enjoy the lighting
Display, the request for donations suggests that
A) the display creates negative externalities.
B) government should tax the producers of holiday lighting.
C) resources are currently overallocated to the provision of holiday lighting in Anytown.
D) resources are currently underallocated to the provision of holiday lighting in Anytown.

Question

Quizplus · Accepted Answer

The fact that the town government is asking for donations to support the lighting display suggests that the resources (money) currently allocated to the provision of holiday lighting in Anytown are insufficient to fully fund the display. This implies that resources are currently underallocated to the provision of holiday lighting in Anytown.

Suppose That the Anytown City Government Asks Private Citizens to Donate