Assume that the towns of Belmont and Lexington have different demand curves for firefighters and can hire firefighters at the same constant marginal cost. Suppose that historically their state government has required the two towns to hire the same number of firefighters, but the state has recently decentralized decision making. Show that the gain in welfare from de-centralization is greater the more inelastic the communities’ demand curves, other things being the same.
Answer to relevant QuestionsIn each of the following circumstances, decide whether the impact of government on the economy increases or decreases and why. In each case, how does your answer compare to that given by standard measures of the size of ...A study by the New York City government of a program to prevent homelessness found that over 90 percent of families who signed up to receive job training, counseling services, and emergency money did not end up in homeless ...In his commencement address at Wesleyan Uni-versity in 2008, then- Senator Barack Obama told the students that “our individual salvation depends on collective salvation.” Is this view consistent with the social welfare ...Suppose that Tang and Wilson must split a fixed 400 pounds of food between them. Tang’s utility function is UT = sqrt (F1) and Wilson’s utility function is UW = ½ sqrt (F2 ), where F1 and F2 are pounds of food to Tang ...Heal [ 2001, p. 1] notes that when Frederick Law Olmsted, the designer of New York City’s Central Park, was asked how the city could pay for the park, “ he responded that its presence would raise property values and the ...
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