Assume that Matt, Joe, and Teresa are the only citizens in a community. A proposed public good has a total cost of $1000. All three citizens will share an equal portion of this cost in taxes. The benefit of the public good is $500 for Matt, $280 for Joe, and $260 for Teresa. In a majority vote, this proposal will most likely be:

Question

Quizplus · Accepted Answer

The total benefit of the public good is $1040 ($500 + $280 + $260), which exceeds the cost of $1000, making it economically efficient. However, since each citizen pays $333.33, Joe and Teresa would vote against it because their individual benefits are less than their costs, leading to a majority vote against the proposal.

Assume That Matt, Joe, and Teresa Are the Only Citizens