Question

Paying for a WiFi Network. Consider a small town with 1,000 households. The town could install a wireless WiFi network that would give everyone in town access to the Internet. Each household is willing to pay a maximum of $50 per year for the network, and the cost of the system is $20,000 per year. (Related to Application 1 on page 647.)a. Is the WiFi system efficient?b. Suppose the town asks for voluntary contributions to support the network. Would you expect the total contributions to cover the $20,000 cost?c. Suppose the town keeps track of the contributions and issues passwords to people who contributed at least $20. Would you expect the total contributions to cover the $20,000 cost?

Answer 1

Answer:

a.The efficiency of the WiFi system will depend upon the usage and the speed of internet provided by the ISP (Internet Service Provider). Keeping in mind that the town have 1,000 households the network to choose will need to be fast and reliable also each household should be allowed to download a certain amount of DATA via internet so that the each household can get benefit from the WiFi System.

b. If each household is willing to pay $50 per year the contribution received will be $50×1,000 = $50,000. So the cost of WiFi system will be recovered.

c. If the town keeps tracks of the contributions and ask the household to contribute at least $20 per year so yes the total cost of WiFi system will be recovered. $20× 1,000= $20,000

Explanation: