Question

Scenario: Benefits of Social Problems

A community public works project will cost $60,000 and will benefit five different individuals.

Individual	Individual Benefit ($)	Individual Cost ($)
1	1,500	2,000
2	5,500	5,000
3	5,000	6,000
4	25,000	21,000
5	28,00	29,000

Assignment Details

Important!

It is expected that the assignment will be completed using an Excel spreadsheet using formulas.

1. Is this project economically feasible? Please show work in an Excel spreadsheet that lists the benefit for each individual.
2. Would this project be approved by a majority at a majority at a referendum?
3. Does this project meet the Pareto efficiency improvement criterion?
4. If possible, revise the cost shares to allow the project to meet the Pareto criterion and to pass a referendum.

Answer 1

Individual	Individual Benefit ($)	Individual Cost ($)	% Gain/(Loss)	Share Of Individual in Overall Gain
1	1,500	2,000	(25.00)	(25.00)
2	5,500	5,000	10.00	25.00
3	5,000	6,000	(16.67)	(50.00)
4	25,000	21,000	19.05	200.00
5	28,000	29,000	(3.45)	(50.00)
	65,000	63,000	3.17	100
1. The Project Is Economically feasible as overall gain is 3.17%
2. Yes The project will be approved by majority,as   individual 3,4 &5 are having majority cost & benefit in terms of amount and also are contributing 100% share in overall gain.
3.Yes the projects meets Pareto Efficiency criterion.. As it is providing more resource to the person who can utilise and get the highest benefit, hence allocation the resource properly to achieve highest economic benefit.