Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 5.A, Problem 1ARQ
To determine
Paradox of voting.
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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.…
1.
Chapter 4
Market Failure Caused by Externalities
Page
94 Problem 1
Draw a supply and demand graph and
identify the areas of consumer surplus and
producer surplus. Given the demand curve,
how will an increase in supply affect the
amount of surplus shown in your diagram ?
Explain. LO4.1 (Differentiate between
demand-side market failures and supply-side
market failures.
2. Individual Problems 15-2
Mr. and Mrs. Ward typically vote oppositely in elections and so their votes "cancel each other out." They each gain 20 units of utility from a vote for
their positions (and lose 20 units of utility from a vote against their positions). However, the bother of actually voting costs each 10 units of utility. The
following matrix summarizes the strategies for both Mr. Ward and Mrs. Ward.
Mr. Ward
Vote
Vote Mr. Ward: -10, Mrs. Ward: -10
Don't Vote Mr. Ward: -20, Mrs. Ward: 10
The Nash equilibrium for this game is for Mr. Ward to
payoff of
O True
Mrs. Ward
O False
Don't Vote
Mr. Ward: 10, Mrs. Ward: -20
Mr. Ward: 0, Mrs. Ward: 0
units of utility and Mrs. Ward receives a payoff of
Suppose Mr. and Mrs. Ward agreed not to vote in tomorrow's election.
This agreement not to vote
True or False: This agreement would increase utility for each spouse, compared to the Nash equilibrium from the previous part of the question.
and for Mrs. Ward to
units of utility.
a Nash…
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