Can someone please help me with this economics quesion?

[algebrahelp]

Suppose that the 100 homeowner's on Beach Drive, each get a benefit of $100,000 from an artificial reef.

a) The artificial reef is socially efficient if its cost is less than $___________

b) Suppose that the reef cost is$500,000. A tax of ____________ per person would generate unanimous support from the 100 homeowners.

c) In actuality the artificial reef costs about $3,000,000. Will the homeowners support building the artificial reef? Why or Why not?


Can someone please help i've tried and tried and can't figure out how to solve these problems.

[JoeyIngles]

a. If it costs less than $10,000,000. That's 100 * 100,000 (number of residents times the benefit each derives).

b. If the reef only costs $500,000, then each person would be required to give $5000. Then the costs would be equally shared and the cost would be well below the benefit each derives.

c. Yes, the homeowners will support this costs. $3,000,000 split between 100 homeowners means that each would pay 30,000. That's still below their benefit for using the reef.

[JoeyIngles]

a. If it costs less than $10,000,000. That's 100 * 100,000 (number of residents times the benefit each derives).

b. If the reef only costs $500,000, then each person would be required to give $5000. Then the costs would be equally shared and the cost would be well below the benefit each derives.

c. Yes, the homeowners will support this costs. $3,000,000 split between 100 homeowners means that each would pay 30,000. That's still below their benefit for using the reef.