ufp_exam1_12

# How can you measure the costs associated with traffic

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size of a city. How can you measure the costs associated with traffic congestion in practice? Problem 2: Private Provision of Local Public Goods The city of Double-Trouble funds its public good provision solely from voluntary contributions from its two residents, Joe “Cool” Phil and Hannah “Nscho-Tschi” Sullivan. Each of its two residents has a utility function over private goods z and public goods g given by: U p ( z p , g ) = ln( z p ) + ln( g ) (1) U h ( z h , g ) = 2 ln( z h ) + ln( g ) (2)

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Hannah’s income is 50. Phil’s income is 100. The marginal cost of producing one unit of the public good is equal to one unit of income. a) Compute the reaction functions of Hannah and Phil. b) Suppose Hannah donates nothing, how much does Philip donate? Suppose Philip donates nothing, how much does Hannah donate? c) Assuming that Hannah and Philip must donate either zero or a positive amount of money, compute the equilibrium of the model? d) Is the equilibrium efficient? Discuss. Problem 3: Public Policy Read the attached article “Pennsylvania Judge Blocks Voter-ID Law” by Kris Maher in the WSJ. a) Briefly discuss how the passage of the law would affect the set of voters participating in election. What type of voters would be less likely to participate under the new law? b) Using your knowledge of the median voter model, how would the passage of such a law affect the identify of the median or decisive voter in an election in PA? Which party is likely to benefit? Explain.
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