Suppose three neighbors must vote on installation of a traffic light that costs $210. All three
will share the cost of the light – that is, each person will contribute $70 to the installation.
Leona values the light at $50; Lionel values the light at $50; and Theo, who drives the most,
values the light at $200.
a) Explain why the traffic light is a public good.
b) Is it efficient for the traffic light to be installed? Why or why not?
c) Suppose a majority rule vote is held to determine whether the light should be installed.
Will the light be installed? Explain any differences between this result and your
answer in part (b).
1 answer
It doesnt work
1 answer