Suppose each of 20 neighbours on street values street repairs at €3000 the cost of the street repair is €40,000 which of the following statements is true ?
Correct answer: A. it is efficient for the government to tax the resident €2,000 each and repair the road
- A. it is efficient for the government to tax the resident €2,000 each and repair the road
- B. It is efficient for each neighbour to pay €3,000 to repair the section of street in front of his/her home
- C. None of these answers are true
- D. it is not efficient to have the street repaired
Explanation
The combined value is 20 × €3,000 = €60,000, which exceeds the €40,000 repair cost, so the repair is efficient. A €2,000 tax per neighbour exactly raises the required €40,000 while each resident receives benefits worth €3,000.
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