Laverne FINANCE, B 1493 – Suppose that the average value

Suppose that the average value that a person in a certain city places on having1000 extra police officers out on the streets for a year is $10. Some peoplehave a high value and some a lower value.The population is 7 million.The city government decides to ask people how much they value an extra 1000police to see if it is worth spending the $50 million a year needed.Two questionnaires are proposed.1) assess the value to them of the extra policeand government explains that people will pay whatever amount they answer—the total of answers is at least $75 million2) reveal how much they value the extra police,but it says that everyone will pay the same amount if the police are hired,provided that the sum of the personal valuations exceeds $75 million.(a) What would be the results of the different surveys?(b) Which is better?(c) Does either survey give people the incentive to tell the truth?(d) Can you devise a survey that does make people reveal the truth?