The beleaguered mayor of Dorchester, Michigan, whom you met earlier in the chapter, has now received complaints about the city’s “outrageously high” levels of general obligation debt (debt backed by the full faith and credit of the city). She asks her assistant to obtain data on the dollar amount of outstanding general obligation debt for four nearby cities so she can benchmark Dorchester’s debt burden. The assistant produces the following table:

Upon reviewing the table, the mayor comments, “If the numbers speak for themselves, this must be a foreign language.” She tells her assistant that few people will understand the meaning of the table if they are forced to interpret all of these large numbers. She asks her assistant to calculate one summary benchmark measure using the data on both debt and population. 

(a) Create a summary measure that is based on both the total debt and population data. What is the common-sense interpretation of the measure? How does Dorchester compare to the other cities on this measure?

(b) The mayor asks her assistant to create a graph or chart summarizing the results based on the new measure. What would be a good graphical format for presenting the findings on the new measure? 

Transcribed Image Text:

City Auburn Park Nova City Dorchester Royal Pine Southville Debt ($) 38,665,200 36,464,000 41,801,025 44,856,200 45,485,175 Population 49,000 51,000 52,000 53,900 55,000