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HW - Market Failures Saved Artville is deciding whether to purchase a new statue for the center of town. The statue will cost the city $20,000 and will only be purchased if the costs are covered. The city is asking for households to help cover the cost of the statue, but households are not forced to contribute. Instructions: Enter your answer as a whole number 0.12 points a. If households are asked to contribute $5 each to help cover the cost of the statue, how many households will need to contribute? households b. If the population of Artville is 4,000 households, of which 3,000 households are expected to free ride, will the city be able to afford the statue if it charges each household $14? Print


O No

O Yes

Respuesta :

Answer:

4,000

No

Explanation:

If the statue costs $20,000 and each family is expected to pay $5, the number of households that would need to contribute = $20,000 / $5 = 4,000

Free riders are people who enjoy the benefits of a service but do not pay for the service. If 3000 households free ride, only 1000 households would pay for the statue. If each household is expected to pay $14. The total amount raised would be 1000 x $14 = $14,000

$14,000 is less than the cost of the statue ($20,000). The city would not be able to afford the cost of the statue

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