2.5 A small city is considering building a public swimming pool that costs $1,800. Each resident's...

 

Transcribed Image Text:

2.5 A small city is considering building a public swimming pool that costs $1,800. Each resident's marginal benefit of the swimming pool is shown in the following table. It takes a simple majority to pass any tax measure, and all residents must vote. Voter Annie Marginal Benefit $ 520 430 Maddie Leo 320 Sophia 290 Ming 180 Sunny 100 a. What is the total social benefit of the swimming pool? (2 points) b. Will building the swimming pool increase or decrease total economic surplus? Explain. (2 points) c. Annie proposes that the city build the pool and finance it with a $300 tax on each resident. How many residents will vote in favor of the proposal, and how many residents will vote against it? Will the proposal pass? (5 points) d. Now, Maddie proposes that the city build the pool and finance it with a proportional income tax, under which all residents pay 0.5% of their incomes in taxes. The residents earn the following incomes: Resident Annie Maddie Leo Sophia Ming Sunny Income $ 75,000 70,000 63,000 54,000 50,000 48,000 How many residents will vote in favor of this proposal, and how many residents will vote against it? Will the proposal pass? (5 points) 2.5 A small city is considering building a public swimming pool that costs $1,800. Each resident's marginal benefit of the swimming pool is shown in the following table. It takes a simple majority to pass any tax measure, and all residents must vote. Voter Annie Marginal Benefit $ 520 430 Maddie Leo 320 Sophia 290 Ming 180 Sunny 100 a. What is the total social benefit of the swimming pool? (2 points) b. Will building the swimming pool increase or decrease total economic surplus? Explain. (2 points) c. Annie proposes that the city build the pool and finance it with a $300 tax on each resident. How many residents will vote in favor of the proposal, and how many residents will vote against it? Will the proposal pass? (5 points) d. Now, Maddie proposes that the city build the pool and finance it with a proportional income tax, under which all residents pay 0.5% of their incomes in taxes. The residents earn the following incomes: Resident Annie Maddie Leo Sophia Ming Sunny Income $ 75,000 70,000 63,000 54,000 50,000 48,000 How many residents will vote in favor of this proposal, and how many residents will vote against it? Will the proposal pass? (5 points)

Answer rating: 100% (QA)

a The total social benefit of swimming pool is sum of personal marginal benfits of all ie 520 430 32... View the full answer