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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Government revenue and expenditure are analysed through taxation, public borrowing, budgets, subsidies, transfers and public debt. The topic explains how fiscal policy affects resource allocation, income distribution, economic stability and growth, while distinguishing direct from indirect taxes, progressive from regressive taxation, and public goods from goods supplied by private markets.
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