Answered

Sabrina, Kris, and Kelly are the only three residents of the small town of Charleston. They are considering whether to hire a police officer to patrol the town. Sabrina values the police officer at $610 per week, Kris values the police officer at $230 per week, and Kelly values the police officer at $150 per week. The competitive wage for a police officer is $900 per week.

a. If the protection provided by the police officer to one resident does not diminish the protection provided to the other residents, then the police officer is ____________

1. a commons
2. an excludable
3. a rival
4. a nonrival
5. a nonexcludable good.

b. Suppose Sabrina proposes a tax whereby all three residents split the cost of the police officer equally.

1. Will the majority of them support this tax?
2. No, they will not support the tax.
3. Yes, they will support the tax.
4. Is this outcome socially efficient?
5. This outcome is not socially efficent.
6. This outcome is socially efficient.

Answer :

Parrain

Answer:

        a. 4. a nonrival

        b. 1. a. No, they will not support the tax.

            2. b. This outcome is socially efficient.

Explanation:

When the services provided by a good to one person does not diminish the good's ability to provide those same services for another, the good is said to be non-rival in nature.

If an equal tax is proposed, not everyone would be in support of it because some would be paying more than they value the policeman. An equal tax would be:

= 900 salary / 3 = $300

This is more than the value that both Kris($230) and Kelly ($150) value the police officer at.

This outcome however, is socially efficient because when costs are split evenly, a socially optimal and efficient outcome often results.

Other Questions