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Suppose the college administrators estimate that the beautification initiative will cost $3,600. To decide whether the initiative should be undertaken, administrators conduct a survey of the college's
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Suppose the college administrators estimate that the beautification initiative will cost $3,600. To decide whether the initiative should be undertaken, administrators conduct a survey of the college's 170 students, asking each of them their willingness to pay for the beautification project. The average willingness to pay, as revealed by the survey, is $18.

User Nikita Misharin
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3 votes

Answer:

the questions seems to be incomplete, so I looked for similar ones:

the total benefit of the project is estimated at $18 x 170 = $3,060

the result is probably lower than expected because:

  • this is an nonexcludable good, and it is nonrival in consumption
  • the free rider problem occurs here
  • college administrators should not carry out the project id they only base their decision on expected benefit

Step-by-step explanation:

User Odm
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