--%>
Assignment Help - homework help

Problem on Infrastructure

The state legislature has voted to develop a grant-in-aid policy to try and induce local communities to devote more resources to improving their infrastructure.

Town O = Has an operating budget of $2 million; currently spends a total of $60,000 on infrastructure
Town M = Has an operating budget of $1 million; currently spends a total of $10,000 on infrastructure

Assume that for each community:

• The price for a unit of infrastructure (I) = $1
• The price for a unit of any other good (AOG) = $1

The state is considering is providing each community with a $40,000 non-matching, categorical grant that can be used only for infrastructure. Predict how this grant would affect the total amount of money Town O spends on infrastructure. 

In your answer, be sure to show in a clearly labeled diagram for Town O only: (a) the original budget line (without grant); (b) the original spending on infrastructure and AOGs without grant; (c) the new budget line (with grant); (d) the range of plausible values for Town O’s spending on infrastructure after the grant.

   Related Questions in Business Economics

  • Q : Define the term invisible hand in

    The “invisible hand” of the marketplace is a word referring to consider as: (w) government policies to set market prices at equilibrium levels. (x) speculative manipulations which create disequilibrium. (y) automatic adjus

    		•
  • Q : Need urgent help need urgent help in

    need urgent help in business economics, please suggest

    		•
  • Q : Managerial Economics Managerial

    Managerial Economics Meaning and definition Managerial economics general refer to the integration of economy th

    		•
  • Q : Describe unequal burdens of

    Describe unequal burdens of unemployment exist?

    		•
  • Q : Illustrate the advantage and

    Illustrate the advantage and disadvantage of Partnership?

    		•
  • Q : Wealth of Nations - pioneering survey

    The Wealth of Nations that a pioneering survey of economic treated was published within: (1) 1849 year, and written by Karl Marx. (2) 1936 year, and written by John Maynard Keynes. (3) 1776 year, and written by Adam Smith. (4) 141 BC,

    		•
  • Q : Marginal rate of substitution Problem:

    Problem: Luke likes to consumer CDs (good1) and pizzas (good 2). His preference over both goods is given by the utility function U(x1; x2) = x21

  • Q : Illustrate Scarcity and choice of

    Illustrate Scarcity and choice of Economic Perspective?

    		•
  • Q : Average Revenue and Marginal Revenue

    When the market price is $25, then the average revenue of selling five units is: w) $5. x) $12.50. y) $25. z) $125. Please guys help me to solve out this type of problem regarding profit in a perfectly competitive market

    		•
  • Q : Define the for whom query in market

    The market system responses the “for whom?” query with: (i) distributing goods on the basis of require. (ii) using central planning to coordinate production decisions. (iii) catering to consumers with adequate resources to demand goods. (i

    		•