Question

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 not be built because the social value does not exceed the cost.
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 be built and paid for with donations collected from residents, as these donations should more than cover the cost of the pool.

Answer 1

B

Step-by-step explanation:

Looking at the scenario given , the social value of the swimming pool to the resident is worth 50,000*50 = $2,500,000 which exceeds the cost of constructing the swimming pool. Based on this , it is a good proposal

However , it is worth mentioning that all the residents might not donate if donation is requested as different classes and categories of people make up the residents.

The best approach here is for the government to build it and pay for it with a tax on the residents. This will make it possible for the cost to be shared among them with less challenge to collection .

Answer 2

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.

Step-by-step explanation:

If the town residents value the pool at $50 each, that means that the total value for the entire town would be approximately $50 x 50,000 residents = $2,500,000. This means that the cost of building the pool is less than the benefit generated by it.

Regarding how it should be paid for, the town must impose a tax for building it. If the town government decided to request donations, some residents will donate while others wouldn't. This happens virtually every time donations are solicited.