Question

Suppose that the Anytown city government asks private citizens to donate money to support the town's annual holiday lighting display. Assuming that the citizens of Anytown enjoy the lighting display, the request for donations suggests that _______.
O government should tax the producers of holiday lighting.
O resources are currently overallocated to the provision of holiday lighting in Anytown.
O the display creates negative externalities.
O resources are currently underallocated to the provision of holiday lighting in Anytown.

Answer 1

Answer:

O resources are currently underallocated to the provision of holiday lighting in Anytown.

Explanation:

Underallocation occurs when there is a failure to meet e set goals or objectives because insufficient resources were assigned to the project. On the other hand overallocation means excess resources are available to carry out a task.

Anytown city government is asking private citizens to make donations towards the annual lighting display. This implies there was underallocation of resources to the lighting display. If there was sufficient funds the private citizens will not be asked to make donations.