Suppose that the Anytown city government asks private citizens to donate money t

Question

Suppose that the Anytown city government asks private citizens to donate money to support the town's annual holiday lighting display. Assuming that the citizens of Anytown enjoy the lighting display, the request for donations suggests that: the display creates negative externalities. government should tax the producers of holiday lighting. resources are currently overallocated to the provision of holiday lighting in Anytown. resources are currently underallocated to the provision of holiday lighting in Anytown.

Explanation / Answer

ans.... resources are currently underallocated to the provision of holiday lighting in Anytown.

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