Three people on a city council have three different spending proposals for snow removal. Mitchell wants to spend $2 million to purchase more trucks and equipment. Williams wants to spend $1 million and purchase half the equipment. Symmes doesn’t
want to purchase any new equipment, but prefers to spend $200,000 for additional stocks of de-icing chemicals. What does the median-voter model suggest will happen in this case? Explain the likely outcome.
Please provide the best answer for the statement.
The median-voter model suggests that the $1 million proposal will be accepted as the compromise position. In a choice between a $1 and $2 million choice, Williams and Symmes (who prefers less spending) will want the $1 million choice. In a choice between the $1 million and $200,000 proposal, Williams and Mitchell (who prefers more spending) will want the $1 million choice. The median position on an issue will most likely be selected.
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Refer to Pollutants. Suppose transactions costs are zero. Who should be made liable for the crop damage if the goal is to achieve an efficient outcome?
A chemical plant's production adds pollutants to a stream which irrigates a farm's crops. The pollutants damage the farm's crops, increasing the firm's costs by $800 per month. The crop damage may be eliminated in two ways: the chemical plant can install a new filtering system costing $300 per month, or the farm can install a new irrigation system costing $600 per month. a. The chemical plant should be made liable, because it is the source of the pollution. b. The chemical plant should be made liable, because it possesses the least-cost method of eliminating the externality. c. The farm should be made liable, because it can receive a bribe from the chemical plant. d. An efficient outcome will be achieved no matter who is made liable for the crop damage.
A seller who continues to earn the same gross revenue from sales whether she raises or lowers her prices faces a demand curve that
A) contradicts the law of demand. B) is completely elastic. C) is completely inelastic. D) is unit elastic. E) is vertical.
If the bidders at a first-price auction have true values of $78, $72, $66, and $65, the item will sell for
a. $78 b. just under $78 c. $72 d. just over $72
If the average price level increases 10 percent per year, and the velocity of money is 2, then the:
A. inflation rate is 5 percent. B. inflation rate is 2 percent. C. inflation rate is 10 percent. D. inflation rate is 20 percent.