Principles of Economics (MindTap Course List)
8th Edition
ISBN: 9781305585126
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 22.2, Problem 2QQ
To determine
Applying median voter theorem.
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The average cost of landscaping services for members of a condominium community is $350 per week. Assume that the quantity of landscaping services is perfectly correlated with the number of gardeners per week. Suppose the community consists of seven residents, each with the identical marginal benefit curve for landscaping services. The marginal benefit of the first gardener is $100 per resident.
a) Assume that the efficient number of gardeners is three per week. What is the political equilibrium under majority rule if each voter is assigned a tax share of $50 per gardener per week? Does the political equilibrium under majority rule differ from the Lindahl equilibrium?
What is meant by limited and bundled choice when voting on a bill or candidate?
Economists James Buchanan and Gordon Tullock are well-known for developing
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the impossibility theorem.
the voting paradox.
the public choice model.
the concept of government failure.
Chapter 22 Solutions
Principles of Economics (MindTap Course List)
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- Outline the median voter theorem and explain its importance to the successful application of a majority voting system.arrow_forwardHow does Arrow's Impossibility Theorem challenge the feasibility of achieving a fair and consistent voting system in economic decision-making?arrow_forwardhow does the election result change if a tax on non-voters doubles the number of voters while preserving the distribution of preferences?arrow_forward
- Distinguish between a carbon-tax and a cap-andtrade strategy for reducing carbon dioxide and other so-called greenhouse gases (that are believed by many scientists to be causing global warming). Which of the two strategies do you think would have the most political support in an election in your home state? Explain your thinking.arrow_forwardSuppose there are three individuals living in a community. Their demands for a public good are described below and they have decided to vote on the level of public good to be provided. The $36 MC is divided equally so each faces a tax price of $12. Would the level of the public good provided via a simple majority vote change if the community became more polarized than before? For example, suppose Doug suddenly develops a demand for the public good MB = 120 - 6Q and Adam develops a demand P = 10 - Q. Does the outcome of simple majority voting after polarization lead to higher, lower, or the same level of public good than before? Doug: MB = 60 - 3Q %3D Carl: MB = 40 - 2Q %3D Adam: MB = 20 - Q %3D O Higher O Lower O Samearrow_forwardFinancial Aid is an example of allocation by majority rule personal characteristics forcearrow_forward
- If the marginal cost of gardener is $500 no matter how many are employed. The marginal benefits per gardener varies for five residents according to the following table: Marginal Benefit for EachGardener Voter 1 4 A 575 550 525 500 B 275 200 125 C 125 100 75 125 100 75 E 100 75 Result A) If each voter is assigned to pay the same tax share of $100 per gardener, what is the political equilibrium under majority rule? B) Show that the Lindahl equilibrium will differ from the political equilibrium under majority rule?arrow_forward1. 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.arrow_forwardTrue or False? For a perfectly competitive market (with no externalities) where a positive per unit tax has been imposed by the government, the sum of consumer surplus, producer surplus, and tax revenue is always less than the sum of consumer surplus and producer surplus before the tax is imposed. If true, is it always the case that government intervention reduces total social welfare? If false, provide a numerical example where a positive per unit tax increases total social welfare in a perfectly competitive market (with no externalities). Briefly explainarrow_forward
- Individuals A, B and C have the following individual demand curves: Q=7-5P Q=10-P Qc=18-3P Make a price quantity chart for each consumer. Then add a column showing the total quantity demanded for a private good. Next show the quantity price chart showing the total demand for a public good. Graph and label all 5 demand curves on the same graph (see provided graph sheet). If the marginal cost is $4 a unit how many units should be bought if the good is a private good? How many units would each individual buy? If the marginal cost is $6 a unit, to the nearest .1 how many units should be bought if the good is a public good? To the nearest S 0.01 what are the Lindahl prices each person is willing to pay? Do consumers of public goods have the same incentives to reveal their true valuations of Public goods as they do of Private goods? Why or why not?arrow_forwardWhat type of government often assumes functions of City governmentarrow_forwardWhat are some of the dominant political considerations involved in the preparation phase of public budgets?arrow_forward
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