A public good that would benefit Karen,Tammy,and Max has a one time installation cost of $900.These three voters must approve any tax plan by simple majority and all three will cast a vote. $$\begin{array} { | c | c | c | }
\hline \text { VOTER } & \text { RESERVATION PRICE } & \text { INCOME } \
\hline \text { Kris } & \$ 100 & \$ 1000 \
\hline \text { Taylor } & \$ 200 & \$ 5000 \
\hline \text { Max } & \$ 700 & \$ 6000 \
\hline
\end{array}$$
Suppose the government proposes a proportional income tax of 8%.The result of the referendum will be that

Question

A public good that would benefit Karen,Tammy,and Max has a one time installation cost of $900.These three voters must approve any tax plan by simple majority and all three will cast a vote. $$\begin{array} { | c | c | c | } 
\hline \text { VOTER } & \text { RESERVATION PRICE } & \text { INCOME } \
\hline \text { Kris } & \$ 100 & \$ 1000 \
\hline \text { Taylor } & \$ 200 & \$ 5000 \
\hline \text { Max } & \$ 700 & \$ 6000 \
\hline
\end{array}$$
Suppose the government proposes a proportional income tax of 8%.The result of the referendum will be that

Quizplus · Accepted Answer

To determine if the public good will be provided, we need to compare the total willingness to pay (WTP) of the voters to the cost of the public good. 
Karen's WTP is not given, so we cannot consider it in our analysis. 
Tammy's WTP is $200, which is less than the cost of the public good ($900), so she will not vote for the tax. 
Max's WTP is $700, which is greater than the cost of the public good ($900), so he will vote for the tax. 
Kris's WTP is $100, which is less than the cost of the public good ($900), so without considering the tax, Kris would not vote for the public good. However, with the tax, Kris would have to pay ($1000 * 0.08 = $80), so her net cost for the public good would be $820, which is less than her WTP of $100. Therefore, Kris will vote for the tax. 
Since all three voters need to approve the tax, the only possible outcome is that Kris and Max will vote for the tax and Tammy will vote against it. Therefore, the correct answer is C.

A Public Good That Would Benefit Karen,Tammy,and Max Has a One