Mike Miller is the town manager of Medfield, a town with 50,000 residents. At a recent town meeting, several citizens proposed building a large public swimming pool in the center of town for all of the residents to enjoy. A survey of all 50,000 residents revealed that the pool would be worth $50 to each of them. Because the cost to build the swimming pool is only $1,000,000, Manager Miller arranges to have the pool built. Everyone in town enjoys the pool, but when Manager Miller asks for donations to pay for the pool, he only collects $250,000. Manager Miller soon realizes that
A)the survey was conducted improperly.
B)the cost of the pool exceeded the social benefits.
C)the pool is a club good.
D)most residents of the town are probably free-riders at the pool.

Question

Quizplus · Accepted Answer

The fact that Manager Miller only collected $250,000 in donations despite the pool being worth $50 to each of the 50,000 residents suggests that many residents are likely free-riders, enjoying the benefits of the pool without contributing financially. This highlights the challenge of financing public goods, as there is often no way to prevent free-riding behavior.

Mike Miller Is the Town Manager of Medfield, a Town