Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter18: Public Economy
Section: Chapter Questions
Problem 11RQ: Why do legislators vote for spending projects in districts that are not their own?
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Question
There are two candidates in an election that compete only on the education budget they will enact if elected. The budget can be any integer from $1 to $8 and the distribution of voters’ preferences over these outcomes is given below. For example, there are 2 voters that prefer a budget of $1, 4 voters that prefer a budget of $2, and so on. Furthermore, all voters have single-peaked preferences. Assume the candidates’ sole objective is to receive as many votes as possible. (Image Attached)
a) Find a proposed budget for each candidate that constitutes an equilibrium. Explain.
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