Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Show all your working. Explain your answers. Suppose a nation has a large number of voters whose population is normalized to one. The government imposes

Show all your working. Explain your answers.

image text in transcribed
Suppose a nation has a large number of voters whose population is normalized to one. The government imposes a flat tax 7 and transforms the tax revenue into public goods. Let g be the level of public goods provided by the government. Then T = g. All voters have the same income y = 1. However, voters differ in their preferences for private consumption related to public goods. Voter i's utility function is u, 2 01,0 +1119, where c = 1 r is voter i's private consumption; and parameter a,- 6 [1,9] captures the voters' preference for private consumption. 30% of the population has a, = 1; 10% of the population has a, = 9. For the rest of the population, a, is distributed uniformly over interval [1, 9]. Voters cast their votes to decide the tax rate r for the nation. Is there a tax rate 7 that is a Condorcet winner? If so, what value of r is the Condorcet winner? Show your reasoning and calculation

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Macroeconomics Principles Applications And Tools

Authors: Arthur O Sullivan, Steven M. Sheffrin, Stephen J. Perez

7th Edition

978-0134089034, 9780134062754, 134089030, 134062752, 978-0132555234

More Books

Students also viewed these Economics questions

Question

=+ a. A change in consumer preferences increases the saving rate.

Answered: 1 week ago