Say a Public Good Is Provided to Two Consumers: John

question 35

Multiple Choice

Say a public good is provided to two consumers: John and Jill. John's willingness to pay for the good is P = 10 - Q, and Jill's is P = 20 - 2Q. The marginal cost to provide the good are 2Q. Assume the government must pay for providing this good by taxing Jill and John equally to raise the necessary revenue. If the total costs of providing the public good are $25, then

• A)both Jill and John would be willing to vote to approve of providing the good.
• B)only Jill would be willing to vote to approve of providing the good.
• C)only John would be willing to vote to approve of providing the good.
• D)neither Jill nor John would be willing to vote to approve of providing the good.

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Definitions:

Interest

The cost of borrowing money, expressed as a percentage of the total amount loaned, or the income earned on invested capital.

Note Receivable

A written promise that requires another party to pay the holder a specific sum of money on a specified date or on demand.

Interest

The cost of borrowing money or the return on investment for the lender, expressed as a percentage of the principal.

Note Receivable

A written promise for amounts to be received by one party from another, typically including the terms for repayment.