Macroeconomics: Principles, Problems, & Policies
20th Edition
ISBN: 9780077660772
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Chapter 5.A, Problem 2ARQ
To determine
The optimal size of project from the economic perspective.
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Suppose there are only five people in a society and each favors one of the five highway construction options in Table 16.2 (include no highway construction as one of the options). Explain which of these highway options will be selected using a majority paired-choice vote. Will this option be the optimal size of the project from an economic perspective?
There are two candidates in an election that compete only on the education budget they will enact if elected. The budget can be any integer from $1 to $8 and the distribution of voters’ preferences over these outcomes is given below. For example, there are 2 voters that prefer a budget of $1, 4 voters that prefer a budget of $2, and so on. Furthermore, all voters have single-peaked preferences. Assume the candidates’ sole objective is to receive as many votes as possible. (Image Attached)
a) Find a proposed budget for each candidate that constitutes an equilibrium. Explain.
Voters arrive at a social ranking of alternatives by consulting a “holy book": the social ranking is
the ranking found in this book. Which of the Arrow's axioms defining an attractive preference
aggregation method is violated by this method?
(a) Non-dictatorship
(b) Independence of irrelevant alternatives
(c) The Pareto principle
(d) Unrestricted domain
Chapter 5 Solutions
Macroeconomics: Principles, Problems, & Policies
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