EBK ECONOMICS
20th Edition
ISBN: 9780077660710
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 5.A, Problem 3ADQ
To determine
The Efficiency under democracy.
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1. A city has three equal-sized groups of people: (1) Type A people consistently prefer more public school expenditure; (2) Type B people prefer high levels of public school expenditure to low levels, and they prefer low levels to medium levels; (3) Type C people most prefer medium levels to low levels, and they prefer low levels to high levels.
Will majority voting generate consistent outcomes in this case? (Hint: you should check if there are cycles in outcomes by changing the order of voting)
A.True
B. False
2. Suppose Florida government has asked you to design and evaluate the effectiveness of an education voucher program. What is wrong with simply comparing the educational performance of those receiving vouchers with those who do not receive vouchers? Explain.
In many models, the amount of government offered services that is socially and economically efficient tends to be much smaller than that is actually produced and given to the people. Discuss why this appears to be the case, and show with a graph where the efficient level of government output would lie with respect to actual output. Do you understand why historically, the level of government services provided tends to rise irrespective of what the efficient level ought to be? Why would this be?
Note:-
Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.
Let's see whether quadratic voting can avoid the paradox of voting that arose in Table 5.3 when using 1p1v in a series of paired-choice
majority votes. To reexamine this situation using quadratic voting, the table below presents the maximum willingness to pay of Garcia,
Johnson, and Lee for each of the three public goods. Notice that each person's numbers for willingness to pay match her or his
ordering of preferences (1st choice, 2nd choice, 3rd choice) presented in Table 5.3. Thus, Garcia is willing to spend more on her first
choice of national defense ($400) than on her second choice of a road ($100) or her third choice of a weather warning system ($0).
TABLE 5.3 Paradox of Voting
Preferences
Public Good
Garcia
Johnson
Lee
National defense
1st choice
3d cholce
2d cholce
Road
2d cholce
1st choice
3d cholce
Weather warning system
3d choice
2d choice
1st choice
Election
Voting Outcomes: Winner
1. National defense vs. road
National defense (preferred by Garcia and Lee)
2. Road vs.…
Knowledge Booster
Similar questions
- 3. Assume a city of 1,000,000 people, 60% of whom are willing to pay $1 maximum (each) to clean up pollution. The rest of the population is wealthier and is willing to pay $100 each to clean up pollution. Pollution clean-up costs $2,000,000. It has been proposed that each person be taxed equally to pay for the pollution clean-up. Will that pass a majority-rule vote? Is it desirable from the point of view of the Pareto criterion? Is it a good idea, using the compensation principle? Which social choice mechanism do you think is best on intuitive grounds, and why?arrow_forwardSuppose George made $20,000 last year and that he lives in the country of Harmony. The way Harmony levies income taxes, each citizen must pay 10 percent in taxes on their first $10,000 in earnings and then 50 percent in taxes on anything else they might earn. So given that George earned $20,000 last year, his marginal tax rate on the last dollar he earns will be __________ and his average tax rate for his entire income will be _________________. a. 50 percent; 50 percent. b. 50 percent; less than 50 percent. c. 10 percent; 50 percent. d. 10 percent; less than 50 percent.arrow_forwardThe New York City Council is ready to vote on two billsthat authorize the construction of new roads in Manhattanand Brooklyn. If the two boroughs join forces, they can passboth bills, but neither borough by itself has enough powerto pass a bill. If a bill is passed, then it will cost the taxpayersof each borough $1 million, but if roads are built in aborough, the benefits to the borough are estimated to be $10million. The council votes on both bills simultaneously, andeach councilperson must vote on the bills without knowinghow anybody else will vote. Assuming that each boroughsupports its own bill, determine whether this game has anyequilibrium points. Is this game analogous to the Prisoner’sDilemma? Explain why or why not.arrow_forward
- Suppose George made $20,000 last year and that he lives in the country of Harmony. The way Harmony levies income taxes, all citizens must pay 10 percent in taxes on their first $10,000 in earnings and then 50 percent in taxes on anything else they might earn. Given that George earned $20,000 last year, his marginal tax rate on the last dollar he earns will be rate for his entire income will be and his average tax O 10 percent; 50 percent O 50 percent; less than 50 percent O 10 percent; less than 50 percent O 50 percent; 50 percentarrow_forwardWhich of the following statements is correct? Choose an answer: O 1. Regardless of which side of the market the tax is levied on, the more inelastic side of the market bears the higher tax burden. O 2. If the supply is more elastic than the demand, then the suppliers bear the greater tax burden than the buyers. 3. The tax burden is incurred on the side of the market where the tax is levied. O 4. The tax burden is always borne half by the supplier and half by the customer. O 5. If the demand is more inelastic than the supply, then the providers bear the greater tax burden than the buyers. O00arrow_forwardA few hundred U.S. sugar makers lobby the U.S. government each year to make sure that the government taxes imported sugar at a high rate. They do so because the policy drives up the domestic price of sugar and increases their profits. It is estimated that the policy benefits U.S. sugar producers by about. $1 billion per year while costing U.S. consumers upwards of $2 billion per year. Which of the following concepts apply to the U.S. sugar tax? a. Political corruption. b. Rent-seeking behavior. c. The collective-action problem. d. The special-interest effect.arrow_forward
- QUESTION 30 Which of the following is NOT true of state constitutions in the United States? O All state constitutions divide their power between three branches: legislative, judicial, and executive. O All states but one have a bicameral legislative body. O All state constitutions allow for initiative, referendum, and recall, democratizing the law-making process. O Early state constitutions favored legislatures over the executive and judicial branches. QUESTION 31 The first elected assembly in American history was: O Massachusetts State Legislature Virginia House of Burgesses O Maine State Senate New York Town Council QUESTION 32 True or False: The United States Constitution is a compact between sovereign states and the federal government. O True O Falsearrow_forwardHow can pork-barrel spending occur in a situation of majority voting when it benefits only a small group?arrow_forwardQUESTION 16 16. Is the total expenditure of revenue on a government program (revenue collected by a tax) the full measure of the program's cost to society? O a) Yes. O b) No, because the benefit to society always exceeds the dollar cost of government programs. O c) No, because this does not include the efficiency cost of collecting the tax revenue. O d) No, because it does not include the cost of program administration and losses due to corruption.arrow_forward
- 1. Recall the regulation model where legislators apply regulations to garner votes. Votes are a function of producer utility (UR ) and consumer utility (UC ). The legislator’s vote/utility function is V = V(UR , UC ). If U R = R, and U C = K – R – L, where K is a constant and R and L are the typical monopoly versus competitive market outcome below. Obviously, both U R and U C are affected by the eventual price (P) set by the legislator because both R and L are affected by that price. (a) Now suppose the demand equation is given by P = 100 - Q , and MC = $20. Write R as a function of the price and show that the price that maximizes producer utility is $60. (b) Given the MC and demand equation above, find the maximum possible consumer surplus (hint: this will be when the market is competitive). (c) Now suppose that (in addition to the information in parts d and e), the legislator gets votes according to V (U R, U C ) = 3U R + U C . Find the price that maximizes the legislator’s votes.arrow_forwardSuppose Walmart has announced plans to seek approval from the planning commission of a small town to build a new store. Develop alist of the main arguments, pro and con, that could be presented at a public hearing on the matter by members of each of these groups: 1. Owners of small businesses located nearby.2. Town residents, and residents of nearby towns. How might a Walmart representative respond to the negative criticisms that might be brought up, and what other benefits could the representative offer the planning board to bolster Walmart’s case for gaining the board’s approval?arrow_forwardThe diagram below shows the marginal costs of pollution abatement for two firms, Firm 1 and Firm 2. Dollars 60 50 40 30 20 10 0 Firm 1 FIGURE 17-5 MC₁ li lz ls ls ls lo l Abatement Dollars 60 50 40 30 20 10 0 Firm 2 MC₂ li z ls ls ls Q6 Q7 Abatement Refer to Figure 17-5. Suppose Firm 1 and Firm 2 are each abating Q3 units of pollution. If the government imposed an emissions tax of $40 per unit of emissions, OA) each firm would abate to the same level. B) Firm 2 would increase abatement beyond Q3 and Firm 1 would abate less than Q3. C) each firm would abate to Q3. D) the level of pollution would be optimal. E) Firm 1 would increase abatement beyond Q3 and Firm 2 would abate less than Q3.arrow_forward
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