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. The cost to build the swimming pool is $1,000,000. Which of the following is the most efficient option?
A)The pool should be built and paid for with donations collected from residents, as these donations should more than cover the cost of the pool.
B)The pool should be built and paid for by the town government and paid for with a tax on the residents because all residents would benefit from it but some residents would not donate if they were asked.
C)The pool should be built and paid for by the wealthiest ten percent of the residents.
D)The pool should not be built because the social value does not exceed the cost.

Question

Quizplus · Accepted Answer

The survey revealed that the pool would be worth $50 to each of the 50,000 residents, which is a total social value of $2,500,000. This is greater than the cost of building the pool ($1,000,000), so it is socially efficient to build the pool. However, relying on donations from residents (Option A) may not be feasible as some residents may not be willing to donate, leading to a shortage of funds. Option C, which suggests that the pool should be paid for by the wealthiest ten percent of residents, is not fair as only a small portion of the population would pay for a facility that would benefit the entire population. Therefore, the most efficient option is for the pool to be built and paid for by the town government with a tax on residents (Option B), as this would ensure that all residents contribute fairly to the cost of the pool, and all would have access to it once it is built.

Mike Miller Is the Town Manager of Medfield, a Town