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Residents of two districts, Oz and Wonderland, initially fall into two types: blue (B) and red (R). In Oz, there are 500 blue residents and 1000 red residents, while in Wonderland there are 1000 blue residents and 500 red residents. Blue residents earn a regular passive income of Yg= 12,000, while red residents' passive income is Y₁ = 2,000 due to their lower initial endowments. Both districts provide a local public good for their residents, G. Utility is given by V₁ = 4Y (G+¹)-G² for i= B, R. The cost of the local public good per resident is C = 23G-8, everywhere. Provision of this good takes place at the local government level, with the amount of provision chosen by majority vote within each district. (a) If migration is costless, describe and explain the equilibrium distribution of residents across the two communities, relating it to the Tiebout hypothesis.

Residents of two districts, Oz and Wonderland, initially fall into two types: blue (B) and red (R). In Oz, there are 500 blue residents and 1000 red residents, while in Wonderland there are 1000 blue residents and 500 red residents. Blue residents earn a regular passive income of Yg= 12,000, while red residents' passive income is Y₁ = 2,000 due to their lower initial endowments. Both districts provide a local public good for their residents, G. Utility is given by V₁ = 4Y (G+¹)-G² for i= B, R. The cost of the local public good per resident is C = 23G-8, everywhere. Provision of this good takes place at the local government level, with the amount of provision chosen by majority vote within each district. (a) If migration is costless, describe and explain the equilibrium distribution of residents across the two communities, relating it to the Tiebout hypothesis.

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter2: Choice In A World Of Scarcity
Section: Chapter Questions
Problem 19CTQ: Suppose Alphonsos town raises the price of bus tickets from 0.50 to 1 and file price of burgers...
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AutoSave Off HU File Home Paste Clipboard Page 1 of 1 Insert Design Layout Calibri (Body) ✓11 BI U ab x₂ x² A ✓ Font V 23 words DX Type here to search Accessibility: Investigate Document1 - Word A A Aa A A References S Mailings Review Paragraph IT Search ↓ View 2¶ S Help AaBbCcDc AaBbCcDc AaBbC AaBbcct AaB ¶ Normal 1 No Spac... Heading 1 Heading 2 Title Styles Residents of two districts, Oz and Wonderland, initially fall into two types: blue (B) and red (R). In Oz, there are 500 blue residents and 1000 red residents, while in Wonderland there are 1000 blue residents and 500 red residents. Blue residents earn a regular passive income of YB = 12,000, while red residents' passive income is Y₁ = 2,000 due to their lower initial endowments. Both districts provide a local public good for their residents, G. Utility is given by Vi 23G-8, everywhere. Provision of this good takes place at the local government level, with the amount of provision chosen by majority vote within each district. y = 4Y₁ (G + ¹) − G² for i = B, R. The cost of the local public good per resident is C = (a) If migration is costless, describe and explain the equilibrium distribution of residents across the two communities, relating it to the Tiebout hypothesis. SHAMU T. (2035000) S Focus BA DEI Find Replace Select Editing ST 13 O Dictate V A Voice Comments Editor Share Reuse Files X Editor Reuse Files + 100% 12:38 05/06/2023
Transcribed Image Text:AutoSave Off HU File Home Paste Clipboard Page 1 of 1 Insert Design Layout Calibri (Body) ✓11 BI U ab x₂ x² A ✓ Font V 23 words DX Type here to search Accessibility: Investigate Document1 - Word A A Aa A A References S Mailings Review Paragraph IT Search ↓ View 2¶ S Help AaBbCcDc AaBbCcDc AaBbC AaBbcct AaB ¶ Normal 1 No Spac... Heading 1 Heading 2 Title Styles Residents of two districts, Oz and Wonderland, initially fall into two types: blue (B) and red (R). In Oz, there are 500 blue residents and 1000 red residents, while in Wonderland there are 1000 blue residents and 500 red residents. Blue residents earn a regular passive income of YB = 12,000, while red residents' passive income is Y₁ = 2,000 due to their lower initial endowments. Both districts provide a local public good for their residents, G. Utility is given by Vi 23G-8, everywhere. Provision of this good takes place at the local government level, with the amount of provision chosen by majority vote within each district. y = 4Y₁ (G + ¹) − G² for i = B, R. The cost of the local public good per resident is C = (a) If migration is costless, describe and explain the equilibrium distribution of residents across the two communities, relating it to the Tiebout hypothesis. SHAMU T. (2035000) S Focus BA DEI Find Replace Select Editing ST 13 O Dictate V A Voice Comments Editor Share Reuse Files X Editor Reuse Files + 100% 12:38 05/06/2023
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