--%>
Assignment Help - homework help

problem on Legislature budget

XY School District has a large number of students in need of remedial instruction. The superintendent of XY School System can allocated her budget between purchasing X units of remedial instruction at a price of $2,000/unit and spending an amount ($Y) on all other school activities.  (For the purposes of this problem, assume that “all other school activities” can be viewed as a composite commodity with a per-unit price of $1,000.)  The Superintendent has a budget of $800,000, raised through local taxes, to allocate between the two activities.

The State Legislature is considering ways to induce XY County to purchase more units of remedial education for underachieving students. It is specifically considering various forms of grants.

1. Budget Constraints:

a. Draw and label Superintendent’s budget line with no State aid (Make sure to put units of remedial instruction on the horizontal axis)

b. Assume the Superintendent chooses to purchase 100 units of remedial instruction and 600 of “other school activities. Label this is allocation as point “K” on your diagram

2. Open-Ended Matching Grants:

a. One option for the State is an open-ended matching grant, under which the state would match XY School District one-for-one every dollar the District spends on remedial instruction. Draw and label the superintendent’s new budget constraint under this program (you should draw this new budget line on the same graph you produced in #1 above)

3. Close-End Matching Grants:

a. A legislator, fearing school districts will respond so aggressively to the subsidy for remedial instruction provided by the matching grant that it will be too costly, proposes that the matching grant program be closed-ended, such that no district can receive more than $100,000 of state aid.  Draw and label the Superintendent’s budget constraint under this closed-end matching grant program (You should draw a new budget line, using the same chart from #1 and #2 above)

b. As a legislator interested in increasing remedial education services, do you think making the matching grant closed ended will lead XY County to provide fewer units of remedial education than if the matching grant were open ended?  Explain.  (Hint, think about income and substitution effects).

   Related Questions in Business Economics

  • Q : When are transaction costs to ultimate

    Transaction costs to ultimate consumers are reduced if: (w) consumers travel long distances to buy directly from manufacturers quite than buying the goods at local retail stores. (x) intermediaries generate income while conveying goods from manufactur

    		•
  • Q : Loathed monopolization and viewed of

    Adam Smith and most of the typical economists who followed instantly in his footsteps: (i) viewed monopoly as no big problem. (ii) encouraged monopolies due to their research and development abilities. (iii) thought monopoly power was a communist plot

    		•
  • Q : Goods and services are scarce because

    Explain:  “Goods and services are scarce because resources are scarce.”  Analyze:  “It is the nature of all economic problems that absolute solutions are denied us.”

    		•
  • Q : Describe four important areas to

    Describe four important areas to emphasize Expenditures?

    		•
  • Q : Labour economic Can someone help me in

    Can someone help me in finding out the right answer from the given options. The Taft Hartley Act of 1946 made it illegal to encompass a: (1) Right-to-work law passed by the state legislature. (2) Conviction for the misdemeanor and serve as union officer. (3) Union for the agricultural migrants or go

    		•
  • Q : How can we compute operating leverage

    How can we compute operating leverage?

    		•
  • Q : Illustrate the advantage of corporate

    Illustrate the advantage of corporate form of organization?

    		•
  • Q : Problem regarding supplies-demands and

    The new supply and demand curves within University City are S0 and D0. But after the county commission imposed a $3 per six-pack excise tax upon beer: (1) demand fell to D1 from the perspectives of beer dealers. (2) co

    		•
  • Q : Utility with food coupons Question: In

    Question: In Vancouver the Salvation Army encourages people to make food voucher donations to panhandlers instead of simply giving them cash. You can buy a food voucher for $5 and give it to a panhandler who can use it to purchase food. The Sa

    		•
  • Q : Economic efficiency enhancement as

    Transaction costs are decreased and economic efficiency is enhanced by: (1) long-term wage and price controls. (2) monopolies which cooperate with central planners. (3) blacklists and yellow dog contracts. (4) bureaucratic tendencies

    		•