Chapter 5, Problem 3P

Sub part (a):

To determine

The Bribe income.

Explanation of Solution

Bribing takes place when the individuals corrupts an official and make him favorable towards them. People use money or other valuable assets or materials to convince the official and make him issue the laws favorable to them.

The bribes cost $1,000 each. There are 52 weeks in a year in which bribing needs to done. The officer visits 2 houses in a week. Thus, the amount that the officer makes through bribing can be calculated by multiplying the total weeks with the number of visits per week and the amount received per bribe. This can be done as follows:

$\begin{array}{c}\text{Total amount made by officer}=\text{No}\text{. of weeks}\times \text{No}\text{. of times per week}\times \text{amount per bribe}\\ =52\times 2\times 1,000\\ =104,000\end{array}$

Thus, the amount made by the officer through the bribing is $104,000.

Economics Concept Introduction

Concept introduction:

Bribing: It is a practice of providing money or such material benefits to the officials in order to make the person being corrupted in favor of the bribing person.

Sub part (b):

To determine

The Bribe income.

Explanation of Solution

The number of housing inspectors is 20. Each of them provides half of their bribe to the construction supervisor. The amount made by the housing inspectors annually is $104,000.

Thus, the amount that the construction supervisor received can be calculated as follows:

$\begin{array}{c}\text{Amount made by construction supervisor}=\left(\begin{array}{l}\text{Amount made by per housing inspector}\\ \times \text{No}\text{.of inspectors}\\ \times \text{Percentage that the inspectors gives }\end{array}\right)\\ =104,000\times 20\times 0.5\\ =1,040,000\end{array}$

Thus, the construction supervisor makes $1,040,000 per year.

Economics Concept Introduction

Concept introduction:

Bribing: It is a practice of providing money or such material benefits to the officials in order to make the person being corrupted in favor of the bribing person.

Sub part (c):

To determine

The Bribe income.

Explanation of Solution

The Number of housing inspectors decreases from 20 to 10. The amount of bribe increases to $2,500 from $1,000. There are 52 weeks, 2 house visits per week and the inspectors gives 50 percent of the bribe to the construction supervisor.

The amount that the inspector makes per year through bribing can be calculated as follows:

$\begin{array}{c}\text{Total amount made by officer}=\text{No}\text{. of weeks}\times \text{No}\text{. of times per week}\times \text{amount per bribe}\\ =52\times 2\times 2,500\\ =260,000\end{array}$

Thus, the amount made by the officer through the bribing is $260,000.

Thus, the amount that the construction supervisor received can be calculated as follows:

$\begin{array}{c}\text{Amount made bt construction supervisor}=\left(\begin{array}{l}\text{Amount made by per housing inspector}\\ \times \text{No}\text{.of inspectors}\\ \times \text{Percentage that the inspectors gives }\end{array}\right)\\ =260,000\times 10\times 0.5\\ =1,300,000\end{array}$

Thus, the construction supervisor makes $1,300,000 per year.

The amount received by the construction supervisor in part b was only $1,040,000. But, in this case, it is $1,300,000. The difference in the amount received by the supervisor can be calculated by subtracting the old amount from the new amount as follows:

$\begin{array}{c}\text{Difference in amount received by supervisor}=\text{New amount}-\text{old amount}\\ =1,300,000-1,040,000\\ =260,000\end{array}$

Thus, the construction supervisor will earn $260,000 more than in part b income.

Since, the amount received by the construction supervisor is increased even with the decline in the number of inspectors, the construction supervisor will be happier with it.

Economics Concept Introduction

Concept introduction:

Bribing: It is a practice of providing money or such material benefits to the officials in order to make the person being corrupted in favor of the bribing person.

Sub part (d):

To determine

The Bribe income.

Explanation of Solution

The number of housing inspectors decreases from 20 to 10. The amount of bribe increases to $1,500 from $1,000. There are 52 weeks, 2 house visits per week and the inspectors give 50 percent of the bribe to the construction supervisor.

The amount that the inspector makes per year through bribing can be calculated as follows:

$\begin{array}{c}\text{Total amount made by officer}=\text{No}\text{. of weeks}\times \text{No}\text{. of times per week}\times \text{amount per bribe}\\ =52\times 2\times 1,500\\ =156,000\end{array}$

Thus, the amount made by the officer through the bribing is $156,000.

Thus, the amount that the construction supervisor receives can be calculated as follows:

$\begin{array}{c}\text{Amount made bt construction supervisor}=\left(\begin{array}{l}\text{Amount made by per housing inspector}\\ \times \text{No}\text{.of inspectors}\\ \times \text{Percentage that the inspectors gives }\end{array}\right)\\ =156,000\times 10\times 0.5\\ =780,000\end{array}$

Thus, the construction supervisor makes $780,000 per year.

The amount received by the construction supervisor in part b was $1,040,000. But, in this case, it is only $780,000. The difference in the amount received by the supervisor can be calculated by subtracting the new amount from the previous amount as follows:

$\begin{array}{c}\text{Difference in amount received by supervisor}=\text{old amount}-\text{New amount}\\ =1,040,000-780,000\\ =260,000\end{array}$

Thus, the construction supervisor will earn $260,000 less than in part b income.

Since the amount received by the construction supervisor is decreased with the decline in the number of inspectors, he will be unhappy.

Thus, he desires to use 20 housing inspectors again.

Economics Concept Introduction

Concept introduction:

Bribing: It is a practice of providing money or such material benefits to the officials in order to make the person being corrupted in favor of the bribing person.