1. The marginal benefits of five individuals for a public good, gardeners, in their neighborhood are...
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1. The marginal benefits of five individuals for a public good, gardeners, in their neighborhood are as follows: Show your working and calculation. Draw graph if it is necessary. Individuals Mohd Jamal Fathihah Suraya Ahmad Marginal Benefit for Gardeners 2 285 250 235 160 125 1 300 285 250 3 265 235 150 145 100 4 5 230 200 200 148 95 70 40 130 115 75 235 150 The marginal cost, MC, to provide the public good is constant at RM750. a. Determine the efficient number of gardeners to provide under voluntary contribution. (9 pts) b. Determine the political equilibrium number of gardeners by simple majority rule. (9 pts) c. Refer to question (b), explain the relationship between the political equilibrium quantity and the medium voter theorem. (6 pts) d. Determine total tax revenue collected and the total cost in the provision of the gardeners in (a) and (b). Will tax revenue cover the cost? (10 pts) e. Suppose gardener is a private good. Determine the market quantity and price of gardeners in the community. (8 pts) f. Would there be a budget surplus? Explain. (3 pts) g. What are the Lindahl prices. Show your calculation. (5 pts) h. Discuss one similarity and one difference between political equilibrium and Lindahl equilibrium. (6 pts) i. Would there be a problem of free-rider in this community of five individuals? Explain. (4 pts) 1. The marginal benefits of five individuals for a public good, gardeners, in their neighborhood are as follows: Show your working and calculation. Draw graph if it is necessary. Individuals Mohd Jamal Fathihah Suraya Ahmad Marginal Benefit for Gardeners 2 285 250 235 160 125 1 300 285 250 3 265 235 150 145 100 4 5 230 200 200 148 95 70 40 130 115 75 235 150 The marginal cost, MC, to provide the public good is constant at RM750. a. Determine the efficient number of gardeners to provide under voluntary contribution. (9 pts) b. Determine the political equilibrium number of gardeners by simple majority rule. (9 pts) c. Refer to question (b), explain the relationship between the political equilibrium quantity and the medium voter theorem. (6 pts) d. Determine total tax revenue collected and the total cost in the provision of the gardeners in (a) and (b). Will tax revenue cover the cost? (10 pts) e. Suppose gardener is a private good. Determine the market quantity and price of gardeners in the community. (8 pts) f. Would there be a budget surplus? Explain. (3 pts) g. What are the Lindahl prices. Show your calculation. (5 pts) h. Discuss one similarity and one difference between political equilibrium and Lindahl equilibrium. (6 pts) i. Would there be a problem of free-rider in this community of five individuals? Explain. (4 pts)
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