Consider the Cobb-Douglas utility function Suppose that a poll tax T = Ti for all i is levied on each of N members of society. Tax revenues are used to finance a public good G. a. Show that the majority voting outcome involves the amount of public good G = αNYm, where Ym denotes the before-tax income of the median voter. b. Now suppose that a proportional income tax Ti = tYi is levied. Show that the majority voting outcome involves the amount of public good is the mean income level. c. When income is uniformly distributed, which outcome is closest to the ancient outcome?
Consider the Cobb-Douglas utility function Suppose that a poll tax T = Ti for all i is levied on each of N members of society. Tax revenues are used to finance a public good G. a. Show that the majority voting outcome involves the amount of public good G = αNYm, where Ym denotes the before-tax income of the median voter. b. Now suppose that a proportional income tax Ti = tYi is levied. Show that the majority voting outcome involves the amount of public good is the mean income level. c. When income is uniformly distributed, which outcome is closest to the ancient outcome?
Chapter12: The Partial Equilibrium Competitive Model
Section: Chapter Questions
Problem 12.11P
Related questions
Question
Consider the Cobb-Douglas utility function
Suppose that a poll tax T = Ti for all i is levied on each of N members of society. Tax revenues are used to finance a public good G.
a. Show that the majority voting outcome involves the amount of public good G = αNYm, where Ym denotes the before-tax income of the median voter.
b. Now suppose that a proportional income tax Ti = tYi is levied. Show that the majority voting outcome involves the amount of public good 
is the mean income level.
c. When income is uniformly distributed, which outcome is closest to the ancient outcome?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 17 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
