Explain the paradox of voting that is illustrated in the table below in choices between the same expenditure on three different public goods. The numbers under each name indicate the voting preferences (first, second, or third choice) of each of the
three citizens in the society.
The voting paradox is illustrated by the different voting decisions. In a choice between spending on a hospital and spending on roads, the majority prefers to spend money on roads. In a choice between spending money on roads or police, the majority prefers to spend money on police. Thus it would seem that expenditures for police are the most preferred because that spending is preferred over roads, and, in turn, spending on roads is preferred over hospital spending. However, in a choice between spending on police or a hospital, the majority prefers spending on a hospital. Voter preferences are inconsistent in this case.
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Several people in Neonland are expecting a sharp rise in the unemployment rate in the near future. Which of the following is likely to happen in this case?
A) The labor demand curves of firms in Neonland will shift rightward. B) Neonland's GDP will fall. C) Current consumption by households will increase. D) Investment by firms will increase.
Empirical evidence shows that in the short run, purchasing power parity ________, and in the long run, purchasing power parity ________
A) holds; does not hold B) holds; holds C) does not hold; holds D) does not hold; does not hold
“If it were not for the law of diminishing marginal returns, the world’s wheat could be grown in a flower pot.” Explain.
What will be an ideal response?
Suppose our firm produces chartered business flights with capital (planes) and labor (pilots) in fixed proportion (i.e., one pilot for each plane)
If the wage rate paid to the pilots increases relative to the rental rate of capital for the airplanes, then: A) the optimal capital-labor ratio should increase. B) the optimal capital-labor ratio should decrease. C) the optimal capital-labor ratio remains the same. D) We do not have enough information to answer this question.