There are three individuals in a community: 1,2 and 3. Their valuations of the public good, G, are MB1=40-2G , MB2=20-G and MB3=10-G/2 . Let MCG=ACG= 12 a )Suppose the individuals must vote to determine the level of G, assuming that person 3 pays all of the cost. What will G be, according to the median voter theorem? Show your work b). Quantify the magnitude of the inefficiency caused by voting in part (a) That is, calculate the net loss of total social surplus that occurs because of the G you found in (a)

There are three individuals in a community: 1,2 and 3. Their valuations of the public good, G, are MB1=40-2G , MB2=20-G and MB3=10-G/2 . Let MCG=ACG= 12 a )Suppose the individuals must vote to determine the level of G, assuming that person 3 pays all of the cost. What will G be, according to the median voter theorem? Show your work b). Quantify the magnitude of the inefficiency caused by voting in part (a) That is, calculate the net loss of total social surplus that occurs because of the G you found in (a)

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.7P

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