Question: B. Now consider the way we modeled these issues in part B of exercise 27.11. Each district gets a project, with the costs and benefits

B. Now consider the way we modeled these issues in part B of exercise 27.11. Each district gets a project, with the costs and benefits varying with the size of the project. The cost of providing y in a district is again c1y2 5 Aya

, but the benefit of the project is reaped by each of the n residents of the district; that is, the benefit is b1y2 5 Bnyb

. Assume again that a . 1 and b # 1.

a. Repeat B

(b) through B

(e) of exercise 27.11 and determine y eq and y*.

b. Are the projects again inefficiently large? How does the inefficiency vary with N?

c. Next, suppose that the benefits of each project are spread across all nN citizens. Derive y eq and y* for this case of each project being a national public good.

d. Is there still an inefficiency from having legislators requesting projects for their districts?

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