Question

1.
The Tiebout model is supported by the fact that residents within metropolitan suburbs have ____ preferences and housing prices are generally _____ in communities with efficient
A.similar/lower
B.varied/higher
C.varied/lower
D.similar/higher

2.
Welfare programs have ____ tax-benefit linkages. The Tiebout model suggests these programs should be offered at the _____ level.
A.strong/local
B.strong/national
C.weak/local
D.weak/national

3.
National defense is best provided at the _____ level because ____.
A.local/there are low economies of scale.
B.national/there are strong tax-benefit linkages
C.local/there are few externalities or spillovers
D.national/there are high economies of scale

Answer 1

Answer-1. Correct option is 'B'

The Tiebout model is supported by the fact that residents within metropolitan suburbs have varied preferences and housing prices are generally higher in communities with efficient. In metropolitan, we often find rent and housing prices higher and people have various preferences accordingly his/her income or budget.

Answer-2. Correct option is 'A'

Welfare programs have strong tax-benefit linkages. The Tiebout model suggests these programs should be offered at the local level. According to the Tiebout hypothesis, tax benefit linkage, goods like public roads with strong benefit linkage should be provided locally.

Answer-3. Correct option is 'D'

National defense is best provided at the national level because there are high economies of scale . National defense is national public good. Economy of scale - goods with large economies of scale (for example, national defense) are not efficiently provided by local jurisdictions.