Table 11-1 Consider the Town of Springfield with Only Three Residents, Sophia

question 63

Multiple Choice

Table 11-1
Consider the town of Springfield with only three residents, Sophia, Amber, and Cedric. The three residents are trying to determine how large, in acres, they should build the public park. The table below shows each resident's willingness to pay for each acre of the park.
-Refer to Table 11-1. Suppose the cost to build the park is $24 per acre and that the residents have agreed to split the cost of building the park equally. If the residents decide to build a park with size equal to the number of acres that maximizes total surplus from the park, how much total surplus will Amber receive?

• A)$0
• B)$26
• C)$32
• D)$56

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Definitions:

Deferral Method

An accounting practice where revenue or expenses are recognized at a later date than when they were initially incurred, aligning income with the periods in which the related cash flow occurs.

Financial Statements

Documents that report the financial activities and conditions of a business or entity, including the balance sheet, income statement, and cash flow statement.

Net Assets

The total assets of a company minus its total liabilities, representing shareholders' equity or owner's equity.

Endowment Contributions

Donations made to an institution, often with the stipulation that the principal remains intact while the income or interest is used for a specific purpose.