Prof. Bryan Caplan
HW #2 (please type; answer any TWO essay questions and ALL of the other questions)
1. (1 page, double-spaced) Why was there platform divergence in
2. (1 page, double-spaced) Who will ultimately bear the incidence
3. (1 page, double-spaced) How would restricting the franchise to
college graduates affect
4. Using the two-equation S&D system from the notes, prove/show that Q falls by [bd/b+d]t whether buyers or sellers legally pay the tax.
5. Using the two-equation S&D system from the notes, prove/show that a profit-maximizing monopolist in a market without taxes produces a larger quantity than a competitive market under a tax-revenue-maximizing government. To simplify the problem, assume that a=0.
Hint: The monopoly maximizes PQ(P)-TC, with TC=Q2/2b. The government just maximizes tQ(t).
6. Give examples of:
a. Single-peaked preferences
b. Non-single-peaked transitive preferences
c. Intransitive preferences
7. Imagine a simple median voter situation with the following twist: party A is more popular than party B, such that every voter is indifferent between their shared ideal point p* provided by party B and a deviation of e from their ideal point provided by party A. Specifically:
Assume further that if voters are indifferent, they vote for party A.
Then intuitively answer the following questions: (no math needed)
a. If both parties maximize their votes, what platforms do they offer and who wins?
b. If party A has policy preferences (it wants to make p as large as possible conditional on winning), what platforms are offered and who wins?
c. How would uncertainty about the position of the median voter affect the results?