FIGURE 17.1 Inefficient voting outcomes. Majority voting can produce inefficient decisions. (a) Majority voting leads to rejection of a public good that would entail a greater total benefit than total cost. (b) Majority voting results in acceptance of a public good that has a higher total cost than total benefit. Total benefit = $1150 Total cost = $900 Total benefit = $800 Total cost = $900 $700 Adams $300 $300 per- per- person person tax tax $350 $350 $300 $300 $250 Benson Conrad $200 Benson Conrad $100 Adams (Votes)o (Yes) (No) (No) (No) (Yes) (Yes) (a) Inefficient majority “no" vote (Ь) Inefficient majority "yes" vote Benefit; Tax Benefit; Tax

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Chapter10: Externalities
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Explain how affirmative and negative majority votes can sometimes lead to inefficient allocations of resources to public goods. Is this problem likely to be greater under a benefits-received or under an ability-to-pay tax system? Use the information in Figures 17.1a and 17.1b to show how society might be better off if Adams were allowed to buy votes.

FIGURE 17.1 Inefficient voting
outcomes. Majority voting can produce
inefficient decisions. (a) Majority voting leads
to rejection of a public good that would entail
a greater total benefit than total cost.
(b) Majority voting results in acceptance of
a public good that has a higher total cost than
total benefit.
Total benefit = $1150
Total cost = $900
Total benefit = $800
Total cost = $900
$700
Adams
$300
$300
per-
per-
person
person
tax
tax
$350
$350
$300
$300
$250
Benson
Conrad
$200
Benson
Conrad
$100
Adams
(Votes)o
(Yes)
(No)
(No)
(No)
(Yes)
(Yes)
(a)
Inefficient majority “no" vote
(Ь)
Inefficient majority "yes" vote
Benefit; Tax
Benefit; Tax
Transcribed Image Text:FIGURE 17.1 Inefficient voting outcomes. Majority voting can produce inefficient decisions. (a) Majority voting leads to rejection of a public good that would entail a greater total benefit than total cost. (b) Majority voting results in acceptance of a public good that has a higher total cost than total benefit. Total benefit = $1150 Total cost = $900 Total benefit = $800 Total cost = $900 $700 Adams $300 $300 per- per- person person tax tax $350 $350 $300 $300 $250 Benson Conrad $200 Benson Conrad $100 Adams (Votes)o (Yes) (No) (No) (No) (Yes) (Yes) (a) Inefficient majority “no" vote (Ь) Inefficient majority "yes" vote Benefit; Tax Benefit; Tax
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