Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 5.A, Problem 1ARQ
To determine
Paradox of voting.
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1.
Chapter 4
Market Failure Caused by Externalities
Page
94 Problem 1
Draw a supply and demand graph and
identify the areas of consumer surplus and
producer surplus. Given the demand curve,
how will an increase in supply affect the
amount of surplus shown in your diagram ?
Explain. LO4.1 (Differentiate between
demand-side market failures and supply-side
market failures.
2. Individual Problems 15-2
Mr. and Mrs. Ward typically vote oppositely in elections and so their votes "cancel each other out." They each gain 20 units of utility from a vote for
their positions (and lose 20 units of utility from a vote against their positions). However, the bother of actually voting costs each 10 units of utility. The
following matrix summarizes the strategies for both Mr. Ward and Mrs. Ward.
Mr. Ward
Vote
Vote Mr. Ward: -10, Mrs. Ward: -10
Don't Vote Mr. Ward: -20, Mrs. Ward: 10
The Nash equilibrium for this game is for Mr. Ward to
payoff of
O True
Mrs. Ward
O False
Don't Vote
Mr. Ward: 10, Mrs. Ward: -20
Mr. Ward: 0, Mrs. Ward: 0
units of utility and Mrs. Ward receives a payoff of
Suppose Mr. and Mrs. Ward agreed not to vote in tomorrow's election.
This agreement not to vote
True or False: This agreement would increase utility for each spouse, compared to the Nash equilibrium from the previous part of the question.
and for Mrs. Ward to
units of utility.
a Nash…
Suppose Tom, Mary and Jill have apartments in the same building, and installing a security system
for their building costs $750. Tom is willing to pay $100 for the security system, Mary is willing to
pay $300 and Jill is willing to pay $300. If the three of them hold a vote on whether to install the
system and split the cost equally, how will the vote go?
O Nobody would vote yes
O Only one would vote yes
Only two would vote yes
All three would vote yes
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