--%>
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 : Briefly state the pros and cons of

    Briefly state the pros and cons of Partnership?

    		•
  • Q : Surpluses in the balance of trade The

    The advocates of laissez-faire policies favor: (i) Govt. control of economy. (ii) Public ownership of all the resources. (iii) Income to be distributed according to requirement. (iv) Surpluses in the balance of trade. (v) Minimal govt. intervention in economy.

  • Q : Best society according to Utilitarianism

    Utilitarianism proposes such that the finest society is one which gives the: (w) fundamental goods to meet people’s requirements. (x) greatest happiness for the maximum number of people. (y) exact measurement of utility and disutility. (d) highe

    		•
  • Q : Determine the relative cost of a product

    If banana divides are $2, CD disks are $10, and SCUBA vacations are $360, then what is the relative cost of a SCUBA vacation in phrases of a CD disk: (i) 36 disks. (ii) 360 disks. (iii) 180 disks. (iv) 20 disks. (v) 3,600 disks.

    Q : Define Direct and inverse relationships

    Define Direct and inverse relationships?

    		•
  • Q : Depreciation of the euro change the

    If the European euro declines in value (depreciates) in the foreign exchange market, would it be easier or harder for the French to sell their wine in the United States?  Suppose you were planning a trip to Paris.  How would the depreciation of the euro chan

    		•
  • Q : Nation’s production possibilities curve

    Suppose that, based on a nation’s production possibilities curve, for 10,000 pizzas domestically an economy must sacrifice to get the one additional industrial robot it desires, but can get that robot from another country in exchange for 9,000 pizzas. To the fol

    		•
  • Q : Who define economics as a subset of

    Economists who viewed economics like a subset of jurisprudence combined: (1) John Stuart Mill. (2) Alfred Marshall. (3) Karl Marx. (4) William Stanley Jevons. (5) Adam Smith. Hey friends please give your opinion fo

    		•
  • Q : Variation of wages in inverse proportion

    This wages vary within inverse proportion to the agreeableness and constancy of the employment was a perception first explicitly stated through: (i) Adam Smith. (ii) Karl Marx. (iii) Thomas Malthus. (iv) John Stuart Mill. (v) David Ricardo.

  • Q : Banking crisis on checkable deposits

    Question: Some developing countries have suffered banking crises in which depositors lost part or all of their deposits (in some countries there is no deposit insurance). This type of crisis decreases depositors' confidence in the banking syst

    		•