Mary and Sue value a townA????1s various summer firework presentations differently. MaryA????1s…

Mary and Sue value a townA????1s various summer firework presentations differently. MaryA????1s demand for the public good is: P = 70 A????1 10Q. SueA????1s demand for the public good is: P = 210 A????1 50Q. The marginal cost of providing fireworks is $100. What is the socially optimal amount of summer firework presentations? Calculate the share of the tax burden for both Mary and Sue (in percentage terms) for fireworks presentations based on Lindahl pricing? Calculate the share of the tax burden for both Mary and Sue (in percentage terms) based on an equal share of the cost. Assume Mary earns $70,000 and Sue earns $30,000, calculate the share of the tax burden for both Mary and Sue (in percentage terms) based on ability to pay. Finally, who is the greater fireworks enthusiast and why?

 

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