What should be the tax burden to Tom and Ray so that their consumer surpluses are equal? Explain.

1. The accompanying table shows Tom and Ray’s total willingness to pay for different amounts of public recreational areas (REC), which is measured in acres. The marginal cost of one acre of recreational area is $1,000.

Tom’s willingness to pay Ray’s willingness to pay REC (acres)
$2,000 $1,000 1
3,000 1,800 2
3,800 2,500 3
4,300 3,100 4
4,500 3,600 5
4,600 4,000 6
4,600 4,300 7
4,600 4,400 8
4,600 4,400 9
Part A: What is the socially optimal level of recreational areas? Assume you cannot purchase partial acres. Explain your answer.

Part B: What should be the tax burden to Tom and Ray so that their consumer surpluses are equal? Explain.

2. Studies that identify the effect of a voucher program on the achievement of students who use vouchers typically do so by comparing the achievement of students who used the voucher to switch to a different school to the achievement of otherwise similar students who wanted to but could not use the voucher to switch to a different school. Will such studies capture the effects of increased competition on the inefficient schools in the voucher-eligible area? Explain.

3. There is an election with three candidates: Lady Left (LL), Carrie Central (CC), and Robert Right (RR). The following are the outcomes in various two- and three-way races:
CC, 100%; RR, 0%
LL, 0%; CC, 100%
RR, 51%; LL, 49%
RR, 35%; LL, 33%; CC, 32%
The voting system is such that first there is a three-way race. Then, if none of the three candidates wins more than 50% of the votes, there is a two-way runoff election between the two candidates who won the most votes.

Is this voting system consistent? Explain which property of consistency is violated, if any.

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