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. $$\begin{array} { | c | c | c | }
\hline \text { VOTER } & \text { RESERVATION PRICE } & \text { INCOME } \
\hline \text { Kris } & \$ 100 & \$ 1000 \
\hline \text { Taylor } & \$ 200 & \$ 5000 \
\hline \text { Max } & \$ 700 & \$ 6000 \
\hline
\end{array}$$
Since the government does not know and cannot discover the voters' true reservation prices,it proposes a head tax of $300 per voter.The result of the referendum is

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. $$\begin{array} { | c | c | c | } 
\hline \text { VOTER } & \text { RESERVATION PRICE } & \text { INCOME } \
\hline \text { Kris } & \$ 100 & \$ 1000 \
\hline \text { Taylor } & \$ 200 & \$ 5000 \
\hline \text { Max } & \$ 700 & \$ 6000 \
\hline
\end{array}$$
Since the government does not know and cannot discover the voters' true reservation prices,it proposes a head tax of $300 per voter.The result of the referendum is

Quizplus · Accepted Answer

To determine the best choice, we need to compare the total benefits of the public good ($900) with the total costs of the tax plan. 
Under the proposed head tax of $300 per voter, the total revenue collected would be $900. 
Kris's total cost of the tax is $100, so she would vote against it. 
Taylor's total cost of the tax is $200, which is less than her reservation price for the public good, so it is uncertain whether she would vote for or against it. 
Max's total cost of the tax is $700, which is more than his reservation price for the public good, so he would vote for it. 
Therefore, the tax plan would fail because it would not receive a simple majority vote from the three voters. 
Since the tax plan fails, the public good would not be provided. 
The best choice in this scenario is B, as it accurately reflects the likely outcome given the information provided.

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