Question

Assume that abby, ben, clara, joe, and matt are the only citizens in a community. A proposed public good has a total cost of $1000. All five citizens will share an equal portion of this cost in taxes. The benefit of the public good is $220 to abby, $210 to ben, $210 to clara, $180 to joe, and $120 to matt. In a majority vote, this proposal will most likely be:

Answer 1

Answer: In a majority vote, this proposal will most likely be accepted.

Explanation:

The cost of the proposed public goods is $1000, which will be shared equally among the 5 people. So, per person share on the provision of public good will be,

$=\frac{1000}{5}$

$= 200$

Since, Abby, Ben and Clara value the good more than the cost they will vote in favor of the provision. But Joe and Matt value it less than the cost so they will vote against the provision.

Value to Abby is $220 which is greater than $200.

Value to Ben is $210 which is greater than $200.

Value to Clara is $210 which is greater than $200.

Value to Joe is $180 which is less than $200.

]Value to Matt is $120 which is less than $200.

So since 3 people out of 5 vote in favor of the proposal, the public good will be provided.