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:

Selling Price

The amount for which something is sold, making it the price a buyer pays to acquire a product or service.

Markup Percent

The proportion added onto the purchase price of products to account for overhead costs and gain a profit.

Cost

The amount of money required to purchase something or the expenditure incurred to produce something.

Markup Percent

The percentage by which the cost of a product is increased to determine its selling price.