Question

In: Economics

2.   A small community currently taxes residents to provide monthly community concerts. Voter A currently pays...

2.   A small community currently taxes residents to provide monthly community concerts. Voter A currently pays a tax per concert equal to $50 per month. This voter receives a marginal benefit of $75 at the current political equilibrium number of concerts per month. Voter A:

a.    is the median voter.

b.   would be made better off if the number of monthly concerts were increased.

c.    would be made worse off if the number of monthly concerts were increased.

d.   has achieved his most-preferred political outcome for monthly concerts.

3.   If all voters have single-peaked preferences, then under majority rule:

a.    cycling of political outcomes can occur.

b.   a political equilibrium exists.

c.    the political equilibrium is the median most-preferred outcome.

d.   both (b) and (c)

4.   Voter A will normally vote in favor of one security guard per week because his marginal benefit is $125 and his tax share is $100 per week. Voter A receives zero marginal benefit from one concert a week and would vote against it. Voter B receives $125 marginal benefit from one concert per week but no marginal benefit from one security guard. One concert per week also will fail to gain a majority when put to the vote. Assuming that both Voter A and Voter B will pay $100 per week in tax for each concert and each security guard,

a.    they can both gain by engaging in logrolling on the two issues.

b.   pairing the issues on one ballot will result in both Voter A and Voter B voting in favor of the combined issue.

c.    pairing the issues on one ballot will result in both Voter A and Voter B voting against the com­bined issue.

d.   implicit logrolling will result in Voter A voting in favor of the combined issue, but in Voter B voting against it.

5.   If bureaucrats seek to maximize the size of their budgets, they will:

a.    seek to fund levels of services up to the point at which MSC = MSB.

b.   seek to fund levels of services for which TSB > TSC.

c.    seek to fund levels of services for which MSC > MSB.

d.   both (b) and (c)

6.   The demand curve for a pure public good is:

a.    obtained by adding the quantity demanded at each possible price for all consumers.

b.   obtained by summing the marginal benefits of each consumer for each possible quantity.

c.    always upward sloping.

d.   always a flat line.

7.   A voter’s most-preferred political outcome will be that for which the:

a.    marginal benefit of a pure public good is equal to the voter’s tax share per unit.

b.   total benefit per unit of a pure public good is equal to the voter’s tax share per unit.

c.    difference between the marginal benefit of a pure public good and the voter’s tax share per unit is maximized.

d.   marginal benefit of a pure public good is equal to zero, no matter what the voter’s tax share per unit.

13. If the quantity of good A is on the vertical axis and the quantity of good B is on the horizontal axis, the slope of the corresponding isocost line is:

a.    the price of good B divided by the price of good A.

b.   the negative of the price of good B divided by the price of good A.

c.    the price of good A divided by the price of good B.

d.   the negative of the price of good A divided by the price of good B.

14.   If the quantity of good A is on the vertical axis and the quantity of good B is on the horizontal axis, the marginal rate of technical substitution of the corresponding isoquant line is:

a.    the marginal product of good B divided by the marginal product of good A.

b.   the negative of the marginal product of good B divided by the marginal product of good A.

c.    the marginal product of good A divided by the marginal product of good B.

d.   the negative of the marginal product of good A divided by the marginal product of good B.

15.   If the quantity of good A is on the vertical axis and the quantity of good B is on the horizontal axis, then the cost-effective mix between the two goods occurs when:

a.    the slope of the associated isoquant line equals the price of A divided by the price of B.

b.   the marginal rate of technical substitution equals the price of A divided by the price of B.

c.    the marginal rate of technical substitution equals the price of B divided by the price of A.

d.   either (a) or (c).

Solutions

Expert Solution

2) Solution: would be made better off if the number of monthly concerts were increased
Explanation: At marginal benefit of $75 the Voter A at the current political equilibrium would become better off when there is an increase in number of monthly concerts

3) Solution: both (b) and (c)
Explanation: Under majority rule the voters have single-peaked preferences when political equilibrium will be the most-preferred median outcome; and a political equilibrium exists

4) Solution: pairing the issues on one ballot will result in both Voter A and Voter B voting against the combined issue
Explanation: When Voter A and Voter B receives $100 per week for each security guard and each concert they will pairing ths concerns that causes both the voters against the combined concern

5) Solution: both (b) and (c)
Explanation: When bureaucrats is willing to maximize their budget size they seek to fund services level for which TSB > TSC and MSC > MSB

6) Solution: obtained by adding the marginal benefit obtained by each consumer at each possible quantity
Explanation: The pure public good demand curve is computed with adding the marginal benefit gained by each buyer at each possible quantity

7) Solution: marginal benefit of a pure public good is equal to the voter's tax share per unit
Explanation: The most-preferred political outcome for a voter will be when marginal benefit equal to the tax share of voter for each unit

As per policy we have to answer first four parts; I have answered more than it


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