Explain the Condorcet paradox. To which type of voting system does it apply?
The Condorcet paradox applies directly to pairwise majority voting. It shows that even if individual voters' preferences exhibit transitivity, that property does not follow through to outcomes of pairwise majority voting. Consequently, the order in which choices are put up, in pairwise fashion, affects the final outcome. Using choices A, B, and C, it may be the case, for example, that under pairwise voting voters choose A over B and B over C, but then they may choose C over A. This result can obtain even when individual voters' preferences are transitive; hence, the paradox.
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Graph the MSB and MSC functions on the same diagram. Show the regionally-based set of standards (ALA and AREMAINDER) that should be recommended to achieve allocative efficiency in each region. Find the numerical value of each standard.
Los Angeles County has the worst urban air quality across all major metropolitan areas in the United States. Automobile emissions contribute significantly to this problem. Assume the California Air Resources Board is consideringwhether to set a uniform emission standard or a regionally-based emission standard, where one standard is set for Los Angeles County and another for the rest of the state. Marginal social benefits (MSB) and marginal social costs (MSC) for the two regions have been estimated as follows: MSBabatement in LA County = 500 ?0.75A MSBabatement in the rest of California = 150 ? 0.25A MSCabatementin all of California = 0.5A, where A is the level of abatement of automobile emissions, and MSB and MSC are in millions of dollars.
Modern portfolio analysis assumes that individuals
A) are risk-averse. B) attempt to maximize liquidity. C) attempt to maximize returns regardless of risk. D) never take risks.
Dog owners do not bear the full cost of the noise their barking dogs create and often take too few precautions to prevent their dogs from barking. Local governments address this problem by
a. making it illegal to "disturb the peace." b. having a well-funded animal control department. c. subsidizing local animal shelters. d. encouraging people to adopt cats.
When one side of a market knows more about a product than the other side, the moral hazard problem is experienced
Indicate whether the statement is true or false