Fiscal administration

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Equity and efficacy presume equity alongside their affordability and fulfillment in the allocation of capital. As such, the resources must be distributed in a manner that is difficult to maximize the happiness of certain members and without diminishing the usefulness of others (Ulbrich, 2011). The principle of equity and productivity is depicted in this case study.
I will consider any outsider whose poverty level is up to 125 percent of the income threshold. For the swimming pool, any participant above the baseline will not be qualified. As such, vertical equity, where people are handled differently by their level of income and capital, will be used for consideration (Ulbrich, 2011). In the determination of charges, efficiency comes first. The charged amount must thus be equal to the marginal cost of supplying the services or else the outsiders consume more than they otherwise would (Ulbrich, 2011).

As a metered service help providers monitor utility, outsiders would pay through fees per use of the services, where children pay a quarter less than adults.

The cost of pool maintenance, the demand of the services, competition, and branding strategy would influence the choice of pricing.

Finally, as overcrowding becomes a problem over the weekends, proper excludability techniques should be employed. For instance, members can be charged higher during the weekends than normal week days. Adults can also be inhibited using the pool from any other day rather than week days only. Additionally, maximum principle, which is increasing the value of the services can be implemented. The result will hike the charges of the swimming pool per pay hence eliminating some members (Ulbrich, 2011).

Question 2

Private insurers are limited to their ability to finance a risk. They assume that majority of the people living along rivers and coastal regions are low-income individuals (Ulbrich, 2011). As a result, their insurability may lead to a market failure in the long run. In fact, the revenue levels of these people inhibit the wellbeing of other economically stable people in flood prone areas. Secondly, private insurers consider themselves better than the public insurers and hence cannot offer themselves for market solutions. According to them, provision of disaster coverage like floods and hurricanes are non-mandatory and government subsidies.

Additionally, if they insure disaster, most private insurers become subject to government regulations. It is a condition that no insurance company would like (Ulbrich, 2011). However, even so, in insuring disasters in these areas, the government faces the risk of moral hazards, whereby insured parties do not take any precaution to mitigate the risk.


Ulbrich, H. (2011). Public finance in theory and practice (1st ed.). Abingdon, Oxon: Routledge.

August 09, 2021

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