Assume That Abby, Ben, and Clara Are the Only Citizens

question 189

Multiple Choice

Assume that Abby, Ben, and Clara are the only citizens in a community. A proposed public good has a total cost of $1,000. All three citizens will share an equal portion of this cost in taxes. The benefit of the public good is $400 each to Abby, Ben, and Clara. Based on economic analysis, the public good should

• A)be produced, because the benefits are greater than the costs.
• B)not be produced, because the costs are greater than the benefits.
• C)be put to a vote and produced only if voters approve it.
• D)not be produced, even if voters vote in favor of it.

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Definitions:

Investment Classifications

The categorization of investment assets based on their characteristics, risks, and potential returns, such as stocks, bonds, and real estate.

Gain or Loss

Gain or loss refers to the financial result from the sale of a capital asset, where a gain occurs if the sale price exceeds the purchase cost, and a loss occurs if the sale price is below the purchase cost.

Sales Price

The amount of money that a buyer pays to purchase a product or service.

Net Proceeds

Net Proceeds refer to the amount of money received from a sale or transaction after all fees, expenses, and costs have been deducted.