1Several states mandate that school district boundaries follow county lines, while other states allow several school districts to locate in the same county. Assume that county size is approximately the same in both of these groups of states. Suppose both groups are considering implementing school vouchers, and proponents in both groups argue that increased competition will lead to greater efficiency. Which group of states is more likely to achieve greater efficiency gains? Hint: Think about Tiebout sorting.
2President Barack Obama appointed Arne Duncan to be the Secretary of Education in 2009. Discuss Secretary Duncan’s methods to address education woes during his tenure as CEO of the Chicago public school system as well as his efforts during his term as Secretary of Education. Summarize the views of his supporters and opponents.
3To Charlie, the marginal benefit (MB) of national defense is MB = 4,500 – 90Q, where Q measures units of national defense. Sally’s marginal benefit is MB = 3,000 – 60Q. The marginal cost of providing national defense is constant and equal to $2,700. Calculate the efficient quantity of national defense. Graph aggregate MB and MC to illustrate the efficient quantity of national defense (label functions and include all relevant values in the graph). Assume policymakers are able to choose the efficient level of national defense because they know each voter’s marginal benefit function. If tax shares are set to force each person to pay exactly what they think national defense is worth at the optimal level, what is Charlie’s tax share and what is Sally’s tax share