Principles Of Microeconomics 2e
2nd Edition
ISBN: 9781680922219
Author: Timothy Taylor, Steven A Greenlaw, David Shapiro
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 18, Problem 16CTQ
Given that rational ignorance discourages some people from becoming informed about elections, is it necessarily a good idea to encourage greater voter turnout? Why or why not?
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Case:
Your non-profit has just been awarded a special government environmental clean-
up grant of $90,000. You are given the choice to take the $90,000 now or wait
until next year. With an election coming up, the amount of next year's grant will
vary based on which party wins. Assuming that money tomorrow is worth the
same as money today, the grant amounts are:
Outcome
Democrats control everything
Republicans control everything
Split government
Assume:
Grant Amount
$160,000
$36,100
$90,000
Probability
0.25
0.25
0.50
Assume your Payoff in each case (based on your utility function) is sqrt (grant
amount).
Question:
Do you accept the Money today or wait until next year? Include Calculations of
the Expected Value and Expected Utility.
Briefly explain why the principle that the majority of voters should decide an election outcome may not always make logical sense.
Scholars and business people tend to agree that businesses should avoid politics because the economic stakes are too high.
True
False
Chapter 18 Solutions
Principles Of Microeconomics 2e
Ch. 18 - Based on the theory of rational ignorance, what...Ch. 18 - What is the cost of voting in an election?Ch. 18 - What is the main factor preventing a large...Ch. 18 - Why might legislators vote to impose a tariff an...Ch. 18 - True or false: Majority rule can fail to produce a...Ch. 18 - Anastasia, Emma, and Greta are deciding what to do...Ch. 18 - Suppose there is an election for Soft Drink...Ch. 18 - How does rational ignorance discourage voting?Ch. 18 - How can a small special interest group win in a...Ch. 18 - How can pork-barrel spending occur in a situation...
Ch. 18 - Why do legislators vote for spending projects in...Ch. 18 - Why does a voting cycle make it impossible to...Ch. 18 - How does a government agency raise revenue...Ch. 18 - What are some reasons people might find acquiring...Ch. 18 - What are some possible ways to encourage voter...Ch. 18 - Given that rational ignorance discourages some...Ch. 18 - When Microsoft was founded, the company devoted...Ch. 18 - Representatives of competing firms often comprise...Ch. 18 - Special interests do not oppose regulations in all...Ch. 18 - To ensure safety and efficacy, the Food and Drug...Ch. 18 - How is it possible to bear a cost without...Ch. 18 - Is pork-barrel spending always a bad thing? Can...Ch. 18 - The United States currently uses a voting system...Ch. 18 - What are some alternatives to a first past the...Ch. 18 - AT10 million dollar. Lobbying Congress to block...Ch. 18 - Occupy Wall Street was a national (and later...Ch. 18 - Say that the government is considering a ban on...
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- Give both answers I give you thumparrow_forwardAll of the following statements are true about median voter theory, except: Select the correct answer below: The median voter is in the middle of the political spectrum. The effects of the U.S. sugar lobby supports median voter theory. Median voter theory suggests that if a candidate needs more than 50% to win an election, the best way to win is to have median preferences. The median voter theory argues that politicians will try to match policies to what pleases the median voter preferences.arrow_forwardThere are several books that cover important information to validate the fact that LOCAL government IS the level of government that has a MUCH GREATER impact on the daily lives of Americans than any other level of government and ironically it is the level of government that gets the least attention from the public and from the media. Participation in local government affords citizens the most control over their own lives but unfortunately it is the level of government with the least voter turnout. Sad but true. Answer the following question: Texas is one of seven states without a state income tax. Should Texas establish a state income tax? Explain 3 advantages and 3 disadvantages and your stand on this issue.arrow_forward
- Suppose there are three people in society who vote on whether the government should undertake specific projects. Let the net benefits of a particular project be $150, $140, and $50 for persons A, B, and C, respectively. a. If the project costs $300 and these costs are to be shared equally, would a majority vote to undertake the project? What would be the net benefits to each person under such a scheme? Would total net benefits be positive? b. Suppose the project cost $375 and again costs were to be shared equally. Now would a majority vote for the project and total net benefits be positive? c. Suppose (presumably contrary to fact) votes can be bought and sold in a free market. Describe what kinds of results you might expect in part a and part b.arrow_forwardThe Principles of Taxation Taxation systems are centered around two basic ideas. One is that people that benefit from services provided by tax revenues should be the ones who pay for them. Secondly, taxes should be paid in proportion to the number of benefits or services that an individual receives. Three Types of Taxes Taxes can be proportional, progressive, or regressive in nature. A proportional tax is equal in that it sets the same percentage of income taxation on everyone regardless of income. So for individuals, as their income rises or falls, they pay the same percentage in tax. A progressive tax imposes a higher percentage rate of taxation as incomes go up. So as people make more money they pay a higher percentage of that income in tax, and the percentage goes down if their income goes down. Regressive taxes are the opposite of progressive. They impose a higher percentage of taxes on lower incomes than on higher incomes. Often these taxes are not income taxes, but other types…arrow_forwardHow does Arrow's Impossibility Theorem challenge the feasibility of achieving a fair and consistent voting system in economic decision-making?arrow_forward
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