Question

Zorroland has a large number of people who are alike in every way. Boppoland has the same number of people as Zorroland, with the same average income as Zorroland, but the distribution of income is wider. Why might Boppoland have a higher level of public good provision than Zorroland?

Answer 1

They are goods provided by the government under welfare schemes, which have a large positive impact on societal well-being. Prices cannot be charged from such goods. They include roads, defense, etc.

If average incomes are the same in the two locations but the distribution is wider in Bop-poland, there are, as a matter of arithmetic, more wealthy (and more poor) people in Bop-poland. Wealthy Boppos may have a fairly high willingness to pay for or provide publicgoods because the cost of provision is small relative to their incomes or because of the in-come effect on their demand for public goods.

Boppoland have a higher level of public good provision than Zorroland