A local college is deciding whether to conduct a campus beautification initiative that would involve various projects, such as planting trees and remodeling buildings, to make the campus more aesthetically pleasing. For the students of the college, the visual appearance of the campus is _and Thus, the visual appearance would be classified as a public good. Suppose the college administrators estimate that the beautification initiative will cost $1,540. To decide whether the initiative should be undertaken,
administrators conduct a survey of the college's 380 students, asking each of them their willingness to pay for the beautification project. The average willingness to pay, as revealed by the survey, is $14.

The benefit of the beautification initiative, as suggested by the survey, is $ .Because the estimated benefit is than the cost, the college administrators _____ undertake the beautification initiative.
The calculation of the benefit of the beautification initiative relied on the ability of the administrators to capture the true willingness to pay of each student accurately.

Which of the following scenarios would cause the survey used by the college administrators to yield misleading data on willingness to pay?
a. Students believe that if the initiative does not happen, the funds for the initiative will not be spent elsewhere.
b. Students believe they will eventually be charged their willingness to pay.

If the beautification project is carried out, a student cannot be excluded from benefitting from the project. The benefit a student derives from the project isn't affected by the benefit other students derive from it

Benefit of the project = number of students x willingness to pay

$14 x 380 = $5320

Because the benefit is greater than the cost of the project, the project should be undertaken

Willingness to pay is the highest amount a consumer is willing to pay for a product

Willingness to pay might be misstated if students think they would be charged their willingness to pay. They would understate their willingness to pay.