Assume that Matt, Joe, and Teresa are the only citizens in a community. A proposed public good has a total cost of $1,000. All three citizens will share an equal portion of this cost in taxes. The beneﬁt of the public good
Is $500 for Matt, $280 for Joe, and $260 for Teresa. In a majority vote, this proposal will most likely be
A) accepted, two in favor and one against.
B) defeated, two against and one in favor.
C) accepted, three in favor and none against.
D) defeated, none in favor and three against.

Question

Quizplus · Accepted Answer

The cost for each citizen is $333.33 ($1,000 total cost divided by 3). Matt benefits by $500, which is more than his cost, so he would vote in favor. However, Joe and Teresa both receive benefits less than their costs ($280 and $260, respectively, versus a $333.33 cost each), so they would likely vote against the proposal. Therefore, the proposal would be defeated with two against (Joe and Teresa) and one in favor (Matt).

Assume That Matt, Joe, and Teresa Are the Only Citizens