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

question 105

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. At the extreme right end, all 100 voters lie to the left. If Candidate X is running against Candidate Z, by moving to the right Candidate X would:

• A)lose some votes from voters on the far left but gain approximately the same number of votes from Z.
• B)not lose any votes from voters on the left and gain some votes from Z.
• C)force Z to move farther to the right in order to keep the same number of votes.
• D)win the election if the move placed X anywhere to the right of 25 on the spectrum.

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Definitions:

Market Supply

The total amount of a product that sellers are willing and able to sell across all markets at a given price level over a specific time period.

Market Demand

The cumulative volume of a good or service that all buyers in a market are prepared and able to buy at a range of prices.

Decrease in Demand

This occurs when the quantity of a good or service that consumers are willing and able to purchase at a specific price level declines, due to factors such as changes in preference or income.

Long-Run Equilibrium

A state in which supply and demand are balanced, and all economic variables are at their natural levels, not influenced by external short-term fluctuations.