FREE RESPONSE QUESTIONS. Answer the questions exactly as directed. 27. [20 points total] Consider a community () with the following characteristics/initial conditions: Ex,o (expenditure on education per pupil) = $8,000 t (property tax rate) = 6(2/3)% = 0.0667 V's (property value per pupil) = $120,000 Y& (income) = $80,000) Ep [price elasticity of demand for education) = - 0.5 Ey [income elasticity of demand for education) = 1.0 Suppose the state provides a Guaranteed Tax Base grant with a base grant (B = $1,000) with the following formula: G, =$1,000 max {0, ($150,000 V.);}(a) [5] What is the effect of the base grant (FE-LOWER} on education spending per pupil (E)? That is, by how much would you expect community 5: to increase education spending per pupil based on the base grant (how much would E increase)? Use whole numbers (no decimal places} with no \