City Budget Allocation Analysis
A city planner is using a graphical model to decide how to allocate a fixed budget between two public goods: acres of new parkland and the number of new library books. The model includes a 'possibility frontier' showing the different combinations of parks and books the city can afford, and a series of 'community satisfaction curves', where curves further from the origin represent higher levels of satisfaction. Four potential allocation plans are identified on the model:
- Plan A: Lies inside the possibility frontier.
- Plan B: Lies on the possibility frontier and intersects a satisfaction curve.
- Plan C: Lies on the possibility frontier and is tangent to the highest possible satisfaction curve.
- Plan D: Lies on a very high satisfaction curve, but is outside the possibility frontier.
Evaluate these four plans. Which plan should the city planner choose and why? In your explanation, justify why the other three plans are inferior choices.
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