Nine voters are voting on a spending level for a local school. They are fully informed about the type of taxes that are involved to support the spending. Their preferences are given by the table below. All voters always prefer outcomes close to their most preferred value to outcomes farther away.
Given these preferences, what outcome would you expect democracy to produce? Carefully explain your answer.
Definitions:
Payoff Matrix
A table that shows the potential outcomes and payoffs for each combination of strategies between players in a strategic game.
Price Setting
The process of determining the selling price of a product or service, typically based on costs, market demand, and competition.
Marginal Cost
The increase in total cost that arises from producing one additional unit of a product or service.
Market Output
The total quantity of goods or services produced and supplied in a market at a given time.
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