Your City Council Is Contemplating Upgrading Its Traffic Control System

question 16

Multiple Choice

Your city council is contemplating upgrading its traffic control system and the council believes that the bigger the computer it installs,the better job it can do.Elected officials want to install the scale of the system that will win the most votes.The city bureaucrats want to maximize the budget.Suppose that you are an economist and your job is to calculate the scale of the system that uses resources efficiently.Public choice theory predicts that the quantity chosen will result in ________.As an informed voter,you can attempt to influence the choice of the correct system by encouraging other voters to ________.

• A)overprovision that maximizes the budget of the bureaucrats;vote only for officials that will provide the smaller efficient quantity
• B)overprovision that maximizes the budget of the bureaucrats;increase their income elasticity of demand for the new traffic control system
• C)the efficient quantity;decrease their income elasticity of demand for the new traffic control system
• D)the efficient quantity;increase their income elasticity of demand for the new traffic control system
• E)overprovision that minimizes the income elasticity of demand of bureaucrats;decrease their elasticity of demand for the new traffic control system

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Definitions:

Net Book Value

The value of an asset as recorded on the balance sheet, calculated by subtracting accumulated depreciation or amortization from the asset's original cost.

Depreciation Expense

Distributing the expense of a physical asset over its life expectancy.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset over its useful life.

Unearned Revenue

Money received by a company for goods or services that have not yet been provided, recorded as a liability until the goods or services are delivered.