Homework 4

Homework 4 - Economics 1480 Homework#4 Question 1 Rosen chapter 6 problem 1 Question 2 Rosen chapter 6 problem 9 Question 3 Logrolling The city of

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Economics 1480 Homework #4 Question 1: Rosen, chapter 6, problem 1 Question 2: Rosen, chapter 6, problem 9 Question 3: Logrolling The city of Westerville has three districts, each of which has one representative on the city council. The council is considering whether or not to fund three street projects, one in each district. Each project costs $3000 and this cost is funded through city-wide taxation (i.e. each of the three districts pays $1000). Each project provides $2500 in benefits to residents within the district; residents outside of the district receive no benefits. a) Is the provision of these projects economically efficient? b) If voted on separately, would any of these projects receive a majority of votes? c) Is there a logrolling equilibrium in which any two projects are funded? d) Is there a logrolling equilibrium in which all three projects are funded? e) Relate this example to the tragedy of the commons problem discussed earlier in the class. Question 4: Rents and Taxi Medallions Read the series in the New York Times titled “Hailing a Dream” (April 13, April 24, and May 27, 2004) and answer the following questions. To access the articles, type “Hailing a Dream” with the “full text” option in Lexis Nexis. a) Explain in words how taxi medallions relate to our discussion of economic rents. b) If the market price of a medallion is $300,000, and taxi driver annual profits equal $30,000, what is the implied interest rate (use the formula from class)? c) Explain how the bureaucratic process of obtaining a license could be considered inefficient rent-seeking?
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Question 5: Arrow’s Theorem and Figure Skating The 2002 Winter Olympics provide an interesting application of Arrow’s Theorem. Figure skating judges use a modified Borda rule: each of 9 judges ranked the four skaters (i.e., 1, 2, 3, or 4). These rankings were then added up and aggregated into an overall ranking (i.e. the skater with the lowest number receives a 1, the second lowest number receives a 2, etc). This procedure was implemented for both the short and long program and a weighted average of these two rankings in then taken (the short program accounts for one-third of the total and the long program accounts for two-thirds). Finally, the skater with the lowest weighted average receives the gold medal. Ties are broken by the higher rankings in the long program. There were four skaters vying for three medals in the long program: Hughes, Slutskaya, Kwan, and Cohen. Before Slutskaya (the final skater in the long program) took the ice, the rankings were as follows: Placement Short rank Long Rank Total 1 Kwan 1 × 0.5 2 2.5 2 Hughes 4 × 0.5 1 3.0 3 Cohen 3 × 0.5 3 4.5 After Slutskaya skated, the rankings were as follows: Placement Short rank Long Rank Total 1 Hughes 4 × 0.5 1 3.0 2 Slutskaya 2 × 0.5 2 3.0 3 Kwan 1 × 0.5 3 3.5 4 Cohen 3 × 0.5 4 5.5 a) Explain how the scoring system ranked Kwan above Hughes before Slutskaya skated but Hughes above Kwan after Slutskaya skated. b)
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 07/22/2010 for the course ECON 1480 taught by Professor Knight during the Spring '10 term at Brown.

Page1 / 14

Homework 4 - Economics 1480 Homework#4 Question 1 Rosen chapter 6 problem 1 Question 2 Rosen chapter 6 problem 9 Question 3 Logrolling The city of

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online