Table 11-1
Consider the town of Tritown with only three residents,Ed,Jim,and Tony.The three residents are trying to determine how large,in acres,they should build the public park.The table below shows each resident's willingness to pay for each acre of the park.

-Refer to Table 11-1.Suppose the cost to build the park is $30 per acre and that the residents have agreed to split the cost of building the park equally.To maximize his own surplus,how many acres would Jim like Tritown to build the park?
A) 0 acres
B) 1 acre
C) 2 acres
D) 3 acres

Question

Table 11-1
Consider the town of Tritown with only three residents,Ed,Jim,and Tony.The three residents are trying to determine how large,in acres,they should build the public park.The table below shows each resident's willingness to pay for each acre of the park.
 
-Refer to Table 11-1.Suppose the cost to build the park is $30 per acre and that the residents have agreed to split the cost of building the park equally.To maximize his own surplus,how many acres would Jim like Tritown to build the park?
A) 0 acres 
B) 1 acre 
C) 2 acres 
D) 3 acres

Quizplus · Accepted Answer

To maximize his own surplus, Jim would like Tritown to build the park in a way that his individual willingness to pay is equal to the cost per acre. In this case, Jim's willingness to pay for the first acre is $60, which is higher than the cost of $30. Therefore, Tritown should build the first acre of the park. For the second acre, Jim's willingness to pay is $40, which is also higher than the cost per acre. Therefore, Tritown should build the second acre as well. For the third acre, Jim's willingness to pay is only $20, which is lower than the cost per acre. Therefore, Tritown should not build the third acre. Hence, Jim would like Tritown to build 2 acres of the park.

Table 11-1 Consider the Town of Tritown with Only Three Residents,Ed,Jim,and Tony.The