Macroeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506756
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 6, Problem 9CQ
To determine
Explain the effect of an efficient project in an economy.
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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.
Explain the extent of the applicability of social political theory in any economy in public finance
What is meant by limited and bundled choice when voting on a bill or candidate?
Chapter 6 Solutions
Macroeconomics: Private and Public Choice (MindTap Course List)
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- 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?arrow_forwardWhat are some of the dominant political considerations involved in the preparation phase of public budgets?arrow_forwardHow does Arrow's Impossibility Theorem challenge the feasibility of achieving a fair and consistent voting system in economic decision-making?arrow_forward
- The above table shows the benefit to each voter if an issue passes. The cost per voter of the issue passing is $100. According to Majority Rules voting, will the issue pass? According to marginal analysis, should the issue pass?arrow_forwardWhich of the following statements is false? a. Public choice economists often explain low voter turnouts in terms of the individual costs and benefits of voting. b. In some instances, simple majority voting leads to a project being undertaken even though the total costs of the project exceed the total benefits. c. If an individual will only vote if he or she feels that his or her vote will make a difference in the election, it is likely that he or she will vote. d. Simple majority voting fails to take into account the intensity of individuals' preferences.arrow_forwardThe average cost of landscaping services for members of a condominium community is $350 per week. Assume that the quantity of landscaping services is perfectly correlated with the number of gardeners per week. Suppose the community consists of seven residents, each with the identical marginal benefit curve for landscaping services. The marginal benefit of the first gardener is $100 per resident. a) Assume that the efficient number of gardeners is three per week. What is the political equilibrium under majority rule if each voter is assigned a tax share of $50 per gardener per week? Does the political equilibrium under majority rule differ from the Lindahl equilibrium?arrow_forward
- True or False 31.The decline in the percentage of the federal government’s budget devoted to national defense is evidence of the lack of new demand for U.S. military activity. a.True b.False 32.In 2000, total United States spending on national defense was less than five percent of GDP. a.True b.False 33.The first priority of national defense spending is the defense of economic interests abroad. a.True b.False 34.Determining the optimal level of military expenditures is easy because the preferences of the median voter a reflected in the vote for president a.True b.False 35.If two nations are equally armed it is highly likely that neither will initiate a conflict. a.True b.False 36.The optimal sharing group for national defense is the size of a nation. a.True b.False 37.Spending so much on arms that the economy of an adversary collapses is called market warfare. a.True b.False 38.Dictatorships, whether stable or…arrow_forwardDistinguish between a carbon-tax and a cap-andtrade strategy for reducing carbon dioxide and other so-called greenhouse gases (that are believed by many scientists to be causing global warming). Which of the two strategies do you think would have the most political support in an election in your home state? Explain your thinking.arrow_forwardConsider a non-rival and non-excludeable public good. The government decides whether or not to provide the good based upon a majority vote. If the good is provided all citizens pay an equal share of the cost. Evaluate the following two statements. (i) The good WILL NOT be provided if it is NOT efficient to do so. (ii) The good will be provided if it is efficient to do so. a. Both (i) and (ii) are always true. b. Neither (i) nor (ii) is always true. c. Only (ii) is always true. d. Only (i) is always true.arrow_forward
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