Assume That Matt, Joe, and Teresa Are the Only Citizens

question 221

Multiple Choice

Assume that Matt, Joe, and Teresa 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 $380 for Matt, $360 for Joe, and $200 for Teresa. 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:

Small Acquisitions

Refers to the purchase of smaller companies, typically involving less financial risk and a simpler integration process compared to larger mergers and acquisitions.

Consolidated Net Income

The total earnings of a company and its subsidiaries after taxes and interest, adjusted for minority interests.

Non-Controlling Interest

A minority stake in a subsidiary that is not owned by the parent company, reflected as a separate component of equity in the consolidated financial statements.

Equity Method

An accounting technique used to record equity investments to reflect the investor's share of the investee's earnings or losses.