Answer:
A local college is deciding whether to conduct a campus beautification initiative that would involve various projects, such as planting trees and remodeling buildings, to make the campus more aesthetically pleasing. Thus, the visual appearance would For the students of the college, the visual appearance of the campus is (non-rival/rival) and (non-excludable/excludable). Thus, the visual appearance would be classified as a public good.
Suppose the college administrators estimate that the beautification initiative will cost $4,400. To decide whether the initiative should be undertaken, administrators conduct a survey of the college's 300 students, asking each of them their willingness-to-pay for the beautification project. The average willingness-to-pay, as revealed by the survey, is $11.
The benefit of the beatification initiative, as suggested by the survey, is $3,300. Because the estimated benefit is (<u>less</u>/greater) than the cost, the college administrators (should/<u>should not</u>) undertake the beautification initiative.
Explanation:
A non-rival good or service is one whose benefit is not reduced by a person's consumption and does not prevent another user from enjoying its benefit.
When a good/service is non-excludable, it is impossible to prevent non paying users from enjoying its benefit. The beautification initiative being non rival and non-excludable can therefore be seen as a public good.
The benefit of the initiative = 300 students X $11
The college has a total of 300 students with an average willingness to pay $11. Because the $3,300 the students are willing to pay is less than the cost of the initiative, the college administrators should not carry out the beautification initiative.
