Provide solutions to the questions sent below.
Consider a beach of length 1. Consumers are evenly (uniformly) distributed along the
beach and dislike walking in the hot sand. There are two ice cream stands.
(a) What is the location of the stands in equilibrium if prices are fixed exogenously (and
cover the expenses)?
(b) Now suppose that the first stand is fixed at point zero. Prices are still fixed exogenously. What location will the second stand choose?
(c) Consider the full game, where stands first choose a location and then a price. How
would you solve this game (a sketch of the steps needed)?
(d) Now solve the full game (that is, find prices and locations), assuming that the first
stand is fixed at point zero, production costs are zero and walking cost is quadratic,
meaning that when a consumer walks the distance x, the cost is x2. You are allowed
to use the fact that with quadratic costs the strategic effect of a change in location
towards the competitor dominates the demand effect (i.e. profits fall when you move
closer to your competitor). Are the locations you get the same as in part (b)? Why?
What would profits be if locations were the same as in part (b)?
(e) Does the full game have an equilibrium if prices and locations are endogenous
and walking costs are linear?
?
1. True or False. Write TR if the statement is true and FL if the statement is false. (1 point each item) 1. An integral part of budget accountability is the evaluation of the financial and physical performance of the LGU. This review and assessment of performance is necessary to introduce improvements and reforms to make the budget more transparent to the people and stakeholders. 2. There are 5 phases in the budget process these are: 1. Quarterly Report of Income 2. Quarterly Financial Report of Operations 3. Quarterly Physical Report of Operations 4. Statement of Receipts and Expenditures 5. Physical and Financial Performance Evaluation Form. 3. Every year, the budget would start from the beginning, from the Zero base, estimating new spending and revenues, and new programs. Thus, the effects from the past years will be forwarded and considered at the current year budget. 4. Budget execution is the last phase in the Local Budget Process, 5. Budget preparation phase involves cost estimation per PPA, preparation of budget proposals, executive review of budget proposals, and preparation of the LEP and the Budget Message and it is the second phase of the budget process. 6. The primary purpose of budget review is to determine whether the Appropriation Ordinance has complied with the budgetary requirements and general limitations set forth in the Local Government Code of 1991, as well as provisions of other applicable laws. 7. Traditional Budget It is also called "Line-item budget" in which expenditures and money allocation are made on an administrative-department basis, not on the basis of what departments really want to achieve. This kind is most used in many developing countries. 8. Performance Budget focuses on the results or outcomes of an agency and not on how the activity/project would be performed. 9. The expenditures and money allocation in the Performance Budget is determined based on how the activity/project would be performed in which information should be organized in terms of activities. 10. Budget Authorization is the second phase in the local budget process. This phase starts from the time the Sanggunian receives the Local Expenditure Program (LEP) submitted by the LCE, and ends with the enactment of the Appropriation Ordinance and approval thereof by the LCE. _ 11. Budget accountability does not cover the monitoring and analysis of all financial transactions, the recording of budgetary accounts in the registries, recording in the books of accounts of all receipts and expenditures and financial reporting of their current status. 12. The execution of the budget involves the release of allotments, the certification of available appropriations and cash, the recording of actual obligations and disbursements of funds for approved PPAs and the delivery of goods and services to target clients in the most efficient, effective, economical and ethical way. 13. The major idea of program budget is how the specific program would achieve the public objectives regardless of what the agency would perform this program.both a) and b) are correct. Questions on D21. Readings; Consider the reading from the book Introducing Keynesian Economics (on DEL). One economist shown in the cartoon, Paul Samuelson, called the book difficult and needing to integrate what was taught by the classical economists, and not ready for prime time until it was better edited. and brilliant. both a) and b) are correct. 31. A cartoon on page 83 shows Keynes reading the report from the Committee on National Expenditures. Keynes remarks the report is foolish. Why would he think that? It obviously did not understand the workings of demand-pull inflation. h. It was suggesting contractionary fiscal policy when the economy needed expansionary fiscal policy, It was suggesting expansionary fiscal policy when the economy needed contractionary fiscal policy. d. They were confusing monetary with fiscal policy. 32. One of the reasons why monetarism became more popular was the stagflation of the 1970s true False 33. One of the assumptions of the theory of comparative advantage is that workers can easily shift from one occupation to another. The reading implies this may not be a realistic assumption. a true false Questions from Mathews and Patrono. Answer questions per text discussion. Consider the following three types of government failure discussed in chapter 11: rent seeking behavior F informational problems regulatory capture Decide for the next four questions, which type of government failure does the example best fit: 34. A municipal transit system is losing an unacceptable amount of money on a bus route due to its extremely low ridership. The city would like to abolish the route. Since the transit system receives federal funds it is required by law to hold a public hearing before abolishing the route. All six loyal riders on the route come to the public hearing and tell how much the community benefits from this route and how much potential this route has. The local officials have many municipal problems on their plate and just assume that each person at the hearing represents the community at large. So the bus route continues to operate with its six loyal riders and no one else. 35 Washington is often said to be a "revolving door." People go back and forth between the private sector and government. Often a good connection in government leads to a good job in the private sector and vice versa. Some say this revolving door is why banking watchdog agencies were not doing their job in recent years, which led to the banking and housing crisis of 2008. 36. The Interstate We Protect You Commission (IWPYC) was created with the original purpose of protecting consumers from the monopoly power of the auto companies. Now the IWPYC members are all 5
