Exam 9: Political Economy

To Charlie,the marginal benefit (MB)of national defense is MB = 4,500 - 90Q,where Q measures units of national defense.Sally's marginal benefit is MB = 3,000 - 60Q.The marginal cost of providing national defense is constant and equal to $2,700.Calculate the efficient quantity of national defense.Graph aggregate MB and MC to illustrate the efficient quantity of national defense (label functions and include all relevant values in the graph).Assume policymakers are able to choose the efficient level of national defense because they know each voter's marginal benefit function.If tax shares are set to force each person to pay exactly what they think national defense is worth at the optimal level,what is Charlie's tax share and what is Sally's tax share?

Majority voting is:

The approach that emphasizes that government failures are often minimized by public finance economists is:

Which of the following is NOT true about farm policy in United States?

Suppose a state has two senators; one is a Republican and the other is a Democrat.The median voter model predicts that:

Suppose that three candidates are running for the same office.The only issues the population cares about are policing and criminal rehabilitation programs.There are three types of voters: the first group wants relatively little policing and lots of rehab; the second group wants medium amounts of both; the third group wants lots of policing and little rehab.The candidate with the highest number of votes wins,and the politicians care only about winning rather than about their personal ideology.Analyze how useful the median voter model will be in this case,specifically focusing on the number of issues in the race and the number of candidates who are running.What problems,if any,would these two things cause in terms of the median voter theory?

Pam and Kunal are the only members of a community that is trying to determine how much of the public good should be produced.Suppose that Pam is willing to pay $10 for the fourth unit of the public good,while Kunal is willing to pay $3 for it.What is the community's marginal willingness to pay for the fourth unit of the public good?

Suppose that a local elected official gives noncompetitive grants to businesses owned by his relatives.This is consistent with:

The condition for equilibrium in the Lindahl model requires that:

Which of the following is a system by which individuals report their willingness to pay for the next incremental unit of a public good and the government charges them that amount to finance this public good?

Which of the following terms defines a preference aggregation mechanism that satisfies the properties of dominance,transitivity,and independence of irrelevant alternatives?

Which of the following refers to the property of dominance?

Suppose that there are 1,000 voters in your city.A total of 400 are willing to pay up to $25 each for the construction of a park,and the other 600 are willing to pay only $10.The construction of the park will cost $12,000.Someone proposes a vote on whether to tax each citizen $12 in order to finance the park. (a)What will be the result according to the median voter model? Is this result socially efficient? Explain. (b)What if instead of being willing to pay up to $25 each,the 400 residents were willing to pay up to $50 each?

Which of the following is necessary for the Median Voter Theorem?

The property of transitivity refers to which of the following?

In the town of New Era,Mary,Scott,and Fredo are all running for the same spot on the village council.New Era residents care only about infrastructure improvements; they know everything about the candidates' positions on that issue but know nothing about their positions on policing.Which of the following assumptions of the median voter model is being violated?