Q1. Consider the electoral competition model with three candidates we saw in Lecture 3. Extend the model to incorporate that candidates not only care about oce but also about the policy that is implemented. You can assume any single-peaked preference you want. Differentiate the equilibria of model. Also the classification should be a function of the bliss point of the candidates.
Q2. Your firm has $45.0 million invested in accounts receivable, which is 90 days of net revenues. If this value could be reduced to 50 days, what annual increase in income would your firm realize if the increase in cash could be invested at 7.5 percent?