Microeconomic Questions 1 In this election year, issues of campaign finance and political strategy are prominent Suppose that you are in charge of a campaign to win a party’s nomination You can spend...


Microeconomic Questions


1 In this election year, issues of campaign finance and

political strategy are prominent Suppose that you are in charge of a campaign

to win a party’s nomination You can spend money on a variety of methods for

trying to increase your candidates vote These include (a) door to door visits,

(b) direct mail, (c) network television advertising




A If the law of diminishing returns applies to campaign

finance, what does it say about the marginal product on each of these campaign

tactics? For our purposes one can view “output” as “votes”



B Suppose you have a fixed budget to spend on attracting voters

in a particular state What condition would have to hold to indicate that you

are allocating your budget across these three methods of attracting voters in

such a way to maximize the expected votes for your candidate? Why does it hold?

(ignore any “strategic” effects ie assume that your campaign budget

choices do not affect the choices made by other candidates)




C Use your answer to (a) to explain why you are likely to

find a way to allocate your campaign budget in such a way so that the condition

you describe in (b) applies



D Suppose an undergraduate intern comes in and says that he

can reduce your television advertising costs by shooting an ad with his video

camera and posting it on YouTube If this reduces the cost of attracting voters

with direct advertising, use your answer to (b) to explain how and why you

would reallocate your budget among the different methods for attracting voters

May 15, 2022
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