Public Choice Analvsis: Example #2 4. Rugrat City is a small city. An economic expansion has caused each voter's income to rise by 20%. The city's current teacher compensation budget is $100 million. For simplicity, suppose that all education funding pays for teacher labor (i.e., wages, salaries, benefits, ctc.). In the following problem, you will determine the preferred amounts of education funding for next year. The school board - consisting of three members (A, B, and C) - votes on all budget proposals. Assume that: (1) Each board member votes fo the budget amount that corresponds most closely in dollar amount to the preferences of their respective constituents (found in the table). (2) To pass any budget proposal, a majority of the board needs to vote in the affirmative. Otherwise, the status quo (S100 million) is maintained. a. Complete the below table. To eam at least partial credit, show your work in the flank area below or within the table. b. You have been hired a coalition of parents of young children as a political consultant to help them to achieve their political goal of increasing the teacher compensation budget as much as possible. Your success is based on how much funding you are able to secure for teacher salaries, benefits, cte. Assume ceteris paribus. Based on the above table information and your calculations, (1) indicate the exact amount of funding that should be brought up to vote at the next school board budget meeting. Then, (2) very specifically explain how you arrived at your answer. c. Suppose that teacher compensation (including benefits, etc.) had been $100,000 per year. However, now, compensation changes by the percentage indicated above (part b). The price elasticity of supply is 0.2 for the teacher labor market. There are currently 1,000 teachers employed at Rugrat City Public Sehools. Assume that labor demand has a generic, unknown elasticity. i. Calculate the new equilibrium compensation amount and the new equilibrium quantity of labor. Be sure to show your work. ii. Using the above elasticity number and/or information to help you draw the slopes of supply and demand, sketch a market diagram (a.k.a., "supply and demand") for the teacher labor market that reflects the above situation. Be sure to properly label ALL axes, curves, and equilibrium PRICE AND QUANTITY NUMBERS along each axis. Did rou include the following? a Unabbreviated labels for the horizontal and vertical axes - Labels for all curves (may be abbreviated) - Write "steep" or "gradual" next to the relevant curve(v) Public Choice Analvsis: Example #2 4. Rugrat City is a small city. An economic expansion has caused each voter's income to rise by 20%. The city's current teacher compensation budget is $100 million. For simplicity, suppose that all education funding pays for teacher labor (i.e., wages, salaries, benefits, ctc.). In the following problem, you will determine the preferred amounts of education funding for next year. The school board - consisting of three members (A, B, and C) - votes on all budget proposals. Assume that: (1) Each board member votes fo the budget amount that corresponds most closely in dollar amount to the preferences of their respective constituents (found in the table). (2) To pass any budget proposal, a majority of the board needs to vote in the affirmative. Otherwise, the status quo (S100 million) is maintained. a. Complete the below table. To eam at least partial credit, show your work in the flank area below or within the table. b. You have been hired a coalition of parents of young children as a political consultant to help them to achieve their political goal of increasing the teacher compensation budget as much as possible. Your success is based on how much funding you are able to secure for teacher salaries, benefits, cte. Assume ceteris paribus. Based on the above table information and your calculations, (1) indicate the exact amount of funding that should be brought up to vote at the next school board budget meeting. Then, (2) very specifically explain how you arrived at your answer. c. Suppose that teacher compensation (including benefits, etc.) had been $100,000 per year. However, now, compensation changes by the percentage indicated above (part b). The price elasticity of supply is 0.2 for the teacher labor market. There are currently 1,000 teachers employed at Rugrat City Public Sehools. Assume that labor demand has a generic, unknown elasticity. i. Calculate the new equilibrium compensation amount and the new equilibrium quantity of labor. Be sure to show your work. ii. Using the above elasticity number and/or information to help you draw the slopes of supply and demand, sketch a market diagram (a.k.a., "supply and demand") for the teacher labor market that reflects the above situation. Be sure to properly label ALL axes, curves, and equilibrium PRICE AND QUANTITY NUMBERS along each axis. Did rou include the following? a Unabbreviated labels for the horizontal and vertical axes - Labels for all curves (may be abbreviated) - Write "steep" or "gradual" next to the relevant curve(v)