A local government decides to use a Groves Clark mechanism to decide whether it should build...

 

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A local government decides to use a Groves Clark mechanism to decide whether it should build a park or not. There are 150 families who might benefit from the presence of the park. 50 of the families are dog walkers who value the park at £20. 50 of the families have young children who value the park at £10. 50 of the families have neither dogs nor children and value the park at £2. (a) If it costs c to build the park, what values of £c is it efficient for the park to be built? (b) For each value 0 ≤c≤ 2000 describe how much money the council raises from the Groves- Clark mechanism. (c) What is the maximum that is raised by the mechanism? A local government decides to use a Groves Clark mechanism to decide whether it should build a park or not. There are 150 families who might benefit from the presence of the park. 50 of the families are dog walkers who value the park at £20. 50 of the families have young children who value the park at £10. 50 of the families have neither dogs nor children and value the park at £2. (a) If it costs c to build the park, what values of £c is it efficient for the park to be built? (b) For each value 0 ≤c≤ 2000 describe how much money the council raises from the Groves- Clark mechanism. (c) What is the maximum that is raised by the mechanism?

Answer rating: 100% (QA)

a To determine if it is efficient to build the park we need to compare the total value of the park t... View the full answer