Table 22-13 the Fortunate Residents of Anytown Have a Budget Surplus. the Surplus

question 219

Multiple Choice

Table 22-13
The fortunate residents of Anytown have a budget surplus. The mayor decided that it is only fair to have the residents vote on what to do with the surplus. The mayor has narrowed the options down to three possible projects: a playground, a library, or a swimming pool. The voters fall into three categories and have preferences as illustrated in the table.

-Refer to Table 22-13.If the mayor asks the residents to choose between the playground and the swimming pool using pairwise voting,

• A) the playground wins by 10%.
• B) the playground wins by 45%.
• C) the swimming pool wins by 10%.
• D) the swimming pool wins by 55%.

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Definitions:

Substitution Effect

The substitution effect occurs when consumers replace cheaper items for more expensive goods due to changes in relative prices, holding utility constant.

Slutsky Compensated Demand Curve

Represents consumer demand by adjusting for changes in purchasing power, illustrating how quantity demanded varies with price, holding utility constant.

Ordinary Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded, with all other factors being held constant.

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, reflecting consumers' sensitivity to price changes.