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Question description
Suppose three neighbors must vote on installation of a traffic light that costs $210. All three will share the cost of the light that is, each person will contribute $70 to the installation. Leona values the light at $50; Lionel values the light at $50; and Theo, who drives the most, values the light at $200.
a) Explain why the traffic light is a public good.
b) Is it efficient for the traffic light to be installed? Why or why not?
c) Suppose a majority rule vote is held to determine whether the light should be installed. Will the light be installed? Explain any differences between this result and your answer in part (b).
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