Eric, Kenji, and Paolo are roommates who are trying to decide how much money each should contribute to a party they are throwing. • Paolo does not care about the party and is on a tight budget. Therefore, he prefers to contribute no money to the party, and his utility declines at a constant rate as the roommates increase the amount of money they spend. • Kenji would ideally contribute $15 because he only wants to buy pizza. However, he would prefer contributing $55 to contributing $0 and not having a party at all. • Eric wants to buy a $120 keg of beer and $45 worth of pizza. Therefore, he would ideally like each to contribute $55 to the party, but if the others are unwilling to contribute that much, he would settle for buying just the pizza (and contributing $15 each) and asking guests to bring beer. Suppose the three roommates vote on spending either $0, $15, or $55 on the party using the Borda count system of voting. That is, each roommate awards three points to his first choice, two points to his second choice, and one point to his third choice. Complete the following table by indicating the number of points each roommate awards to each option and then summing the scores of each option to obtain a final ranking. Borda Count For Spending... $55 $15 $0 Eric Kenji Paolo Total Under a system of Borda count, the winning option is If, instead, the roommates were to hold a two-phase election (such that they first voted between two options, then voted between the winner of that contest and the final option), the winner would be . (Hint: Determine the outcome if the roommates first voted between $55 and $0, and then voted between the winner of that contest and $15.) The median voter in this situation is
Eric, Kenji, and Paolo are roommates who are trying to decide how much money each should contribute to a party they are throwing. • Paolo does not care about the party and is on a tight budget. Therefore, he prefers to contribute no money to the party, and his utility declines at a constant rate as the roommates increase the amount of money they spend. • Kenji would ideally contribute $15 because he only wants to buy pizza. However, he would prefer contributing $55 to contributing $0 and not having a party at all. • Eric wants to buy a $120 keg of beer and $45 worth of pizza. Therefore, he would ideally like each to contribute $55 to the party, but if the others are unwilling to contribute that much, he would settle for buying just the pizza (and contributing $15 each) and asking guests to bring beer. Suppose the three roommates vote on spending either $0, $15, or $55 on the party using the Borda count system of voting. That is, each roommate awards three points to his first choice, two points to his second choice, and one point to his third choice. Complete the following table by indicating the number of points each roommate awards to each option and then summing the scores of each option to obtain a final ranking. Borda Count For Spending... $55 $15 $0 Eric Kenji Paolo Total Under a system of Borda count, the winning option is If, instead, the roommates were to hold a two-phase election (such that they first voted between two options, then voted between the winner of that contest and the final option), the winner would be . (Hint: Determine the outcome if the roommates first voted between $55 and $0, and then voted between the winner of that contest and $15.) The median voter in this situation is
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Eric, Kenji, and Paolo are roommates who are trying to decide how much money each should contribute to a party they are throwing.
• Paolo does not care about the party and is on a tight budget. Therefore, he prefers to contribute no money to the party, and his utility
declines at a constant rate as the roommates increase the amount of money they spend.
• Kenji would ideally contribute $15 because he only wants to buy pizza. However, he would prefer contributing $55 to contributing $0
and not having a party at all.
• Eric wants to buy a $120 keg of beer and $45 worth of pizza. Therefore, he would ideally like each to contribute $55 to the party, but
if the others are unwilling to contribute that much, he would settle for buying just the pizza (and contributing $15 each) and asking
guests to bring beer.
Suppose the three roommates vote on spending either $0, $15, or $55 on the party using the Borda count system of voting. That is, each roommate
awards three points to his first choice, two points to his second choice, and one point to his third choice.
Complete the following table by indicating the number of points each roommate awards to each option and then summing the scores of each option to
obtain a final ranking.
Borda Count For Spending...
$55
$15
$0
Eric
Kenji
Paolo
Total
Under a system of Borda count, the winning option is
If, instead, the roommates were to hold a two-phase election (such that they first voted between two options, then voted between the winner of that
contest and the final option), the winner would be
(Hint: Determine the outcome if the roommates first voted between $55 and $0, and
then voted between the winner of that contest and $15.)
The median voter in this situation is
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