You are the mayor of a town with 20,000 residents.The head of your economic development agency recently conducted a survey in which the 20,000 residents said that a small public library in the center of town would be worth $40 to each of them.Because the cost to build the library is only $500,000,you arrange to have the library built.Everyone in town enjoys the library,but when you asked for donations to pay for the library,you only collected $100,000.You are convinced that

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The fact that only $100,000 was collected in donations suggests that many residents were likely free-riders and did not contribute to the library even though they benefited from it. This is a common problem with public goods like libraries, where people may enjoy the benefits without wanting to pay for them. Option A is not necessarily true, as people may value the library but not be willing or able to donate the full amount. Option B is not supported by the information given, as the social benefits are stated to be worth $40 per resident. Option C is also irrelevant to this situation, as the tragedy of the commons refers to environmental resources like fisheries, not public goods like libraries.

You Are the Mayor of a Town with 20,000 Residents