Citizens of Tinytown are considering building a new city park.If each voter in Tinytown has a reservation price that is less than the total cost of the park,then

Question

Quizplus · Accepted Answer

If each voter's reservation price is less than the total cost of the park, then there is a collective action problem, as no single voter has an incentive to pay for the entire park. Therefore, it would require some sort of collective action by voters to fund the park. This could be through taxes or fundraising efforts, for example. Option A is incorrect as it assumes that benefits must be less than costs for the park to not be built. Option C is unlikely as it is rare for private firms to build public parks without any form of government involvement. Option D is too extreme and assumes that the citizens will never find a way to fund the park.

Citizens of Tinytown Are Considering Building a New City Park