Hotelling's Model Has Been Used to Describe Differentiation in the Political

question 124

Multiple Choice

Hotelling's model has been used to describe differentiation in the political "market." Suppose that 100 voters are evenly distributed between the extreme left and the extreme right on the political spectrum, and that all voters vote, and they always vote for the candidate closest to them on this spectrum. The numbers on this spectrum represent the number of voters lying to the left of the number. So, at the midpoint, fifty voters lie to the left and fifty to the right. Suppose Candidate X is running against Candidate Y. If Candidate Z enters the race:

• A)approximately half of the voters who were going to vote for X will now vote for Z.
• B)X will win because Y and Z will be competing for the same voters.
• C)all of the voters who were going to vote for Y will now vote for Z.
• D)most of the voters who were going to vote for Y will now vote for Z.

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Definitions:

Industry

The organized economic activity related to the production, processing, and marketing of goods and services.

Interindustry Competition

Competition among firms that operate in different industries but compete for the same set of customers or inputs.

Oligopolistic Producers

Firms within a market structure where a small number of companies have the majority of market share and thus can significantly influence price and production levels.

Purely Competitive

Describes a market structure where many sellers offer identical products, and no single seller can influence the market price.