1. A local jurisdiction is (a la Tiebout) populated with 100
households who have identical quasi-demands for a local public good
G that can be expressed as:
G = 100 – 0.5p,
where p is the tax-price per unit of the public
good. Each unit of the public good costs $4000.
Each household pays pG in taxes.
a. What is the tax-price (p) for a household per unit
of the public good?
b. What is the optimal amount of the public good for
this jurisdiction?
c. How much will each household pay in taxes?
d. If the population doubles what will happen to G?
1. A local jurisdiction is (a la Tiebout) populated with 100 households who have identical quasi-demands for a local pub
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1. A local jurisdiction is (a la Tiebout) populated with 100 households who have identical quasi-demands for a local pub
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