1) There is a city council meeting in Berkeley regarding annual funding for the local police department. The spending will be nanced via a property tax. The council has three members: Biggie, Pac, and Jigga, each of whom represent constituent groups whose average property value is given in the Table below. Council Member Property Value (in $) Biggie $800,000 Pac $400,000 Jigga $1,800,000 The three groups are of equal size so for any property tax rate '7', per capita police spending will be: S = 7% X $800,000 + % x 400,000 + % x $1,800,000) = T X $1,000,000. Suppose that the valuation of per capita police spending in each group is $200 x \\/ so that each group evaluates tax proposals using the indirect utility function V(S, P, T) = 200\\/ TP where P is the group's property value. The meeting involves voting on tax rates in decreasing order from 'T = 0.05 to T = 0.01 in intervals of 0.01. The rst proposal to obtain a majority of the votes passes. a) (10 pts) Which tax rate will prevail? Why? Use a spreadsheet to illustrate your reasoning. b) (10 pts) Suppose that those groups who prefer tax levels different from the one chosen leave the city. If there is another city council meeting with the single remaining constituency what will be the new tax rate? Will this yield more or less police services than in part a)? c) (10 pts) Suppose that instead of funding police services with a property tax, the government decides to provide private security guards to each constituent group. The guards are nanced by a uniform fee of $1 for each dollar of police services provided. What level of service will be consumed by each group