In Figure 2, We Illustrate a Situation Where We Have

question 3

Multiple Choice

In Figure 2, we illustrate a situation where we have a bicameral legislature. The location of the status quo policy is SQ, the location of the median voter in the lower chamber is LC, and the location of the median voter in the upper chamber is UC. Assume that both median voters have a single-peaked utility function and that the support of both chambers is needed to pass a new policy. Assume that a voter will vote for a new policy over the status quo if she is indifferent between them.
Figure 2: Illustrating a Bicameral Legislature

-In Figure 2, what is the overlapping range of policies preferred by both chambers to the status quo?

• A) 3-5
• B) 2-3
• C) 3-6
• D) 3-9
• E) 6-10

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Definitions:

Fixed Cost

Costs that do not fluctuate in relation to the level of production or sales, such as rent or salaries.

Economic Order Quantity

The optimal quantity of inventory to order that minimizes total inventory costs, including holding, ordering, and shortage costs.

Carrying Cost

The total expense of holding a particular asset over time, including storage, insurance, and taxes, but excluding buying cost.

Order Cost

Expenses incurred in placing and receiving orders from suppliers, including costs related to processing, shipping, and handling.