Assume That Abby, Ben, Clara, Joe, and Matt Are the Only

question 29

Multiple Choice

Assume that Abby, Ben, Clara, Joe, and Matt are the only citizens in a community. A proposed public good has a total cost of $1,000. 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

• A)accepted; the public good is produced, even though it is economically inefficient.
• B)defeated; the public good is not produced, even though it would have been efficient to do so.
• C)accepted; the public good is produced, which is economically efficient.
• D)defeated; the public good is not produced, which is the proper outcome.

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Definitions:

Quantity Supplied

The total number of units of a good or service that sellers are willing and able to sell at a given price.

Price Ceiling

A price cap established by the government to regulate the maximum charge for goods, services, or commodities.

Crude Oil

A natural, unrefined petroleum product composed of hydrocarbon deposits.

OPEC

The Organization of Petroleum Exporting Countries, an intergovernmental organization of oil-producing countries that aims to manage the supply of oil to stabilize prices and ensure steady earnings.