Question

In: Economics

The state legislature is deciding whether to increase, decrease or not change the the current tax...

The state legislature is deciding whether to increase, decrease or not change the the current tax rate for wastewater discharge. A third of the lawmakers are naturalists, a quarter of the lawmakers like the status quo the most but also receive lobby from the polluters, the remaining of lawmakers want to change current tax rate and they slightly prefer to lowering the tax rate

2. Following question 1, what will be the choice if the legislature implements Boda counts on the coting results? (the highest ranked choice receives a score of 3, then 2,1 )

Lower tax

Status quo

Raise tax

Not determined

3. Following question 2, what will be the choice of policy if the naturalists manipulate their preference in Boda counts

Lower tax

Status quo

Raise tax

Not determined

4. Following question 1, what will likely be the choice policy of the lobby is now allowed

Lower tax

Status quo

Raise tax

Not determined

5. Following question 1, what will likely be the choice policy if the legislature first vote on whether or not to change the tax rate, then vote for whether to increase or decrease the tax rate.

Lower tax

Status quo

Raise tax

Not determined

6. Following question 1, what will likely be the choice policy if the legislature first vote on whether to increase or decrease the tax rate, then vote for whether or not to change the tax rate?

Lower tax

Status quo

Raise tax

Not determined

Solutions

Expert Solution

Assuming there are 12 lawmakers-

  • 1/3 of 12 will be 4 ( naturalists )
  • 1/4 of 12 will be 3 ( lawmakers who agree with the existing state itself)
  • left over will be 5 lawmakers ( who prefer lowering the current tax rate)

[2] In boda counts , rank preference is given as in question ranks are not mentioned, therefore exactly boda counts cannot be determined.

[3] If they manipulate their preference answer can be changed but as we dont know what they actually voted for we cannot exacty tell what is correct answer so, again it is not determined.

[4] If lobby is not allowed then majority is with lawmakers [3rd category] and they will go for lower the tax.

[5] If firstly there is to change or no change the tax then majority will be like naturalists+lawmakers[3rd actegory] and other will be only 2nd category.

Thus here tax rate to be changed won and further if lowering or raising is voted then lowering the tax will win.

[6] Cannot be determined as we dont know status quo will be favoured by which category in first voting.

FOR ANY DOUBTS PLEASE DO COMMENT.

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