What is the Tiebout hypothesis? What will be an ideal ...

[asd123]

What is the Tiebout hypothesis?
 
  What will be an ideal response?

Question 2

Refer to Figure 4-4. The figure above represents the market for iced tea. Assume that this is a competitive market. If the price of iced tea is 1, what changes in the market would result in an economically efficient output?
 
  A) The price would increase, the demand would increase, and the supply would decrease.
  B) The quantity supplied would increase, the quantity demanded would decrease, and the equilibrium price would increase.
  C) The price would increase, the quantity supplied would increase, and the quantity demanded would decrease.
  D) The price would increase, quantity demanded would increase, and quantity supplied would decrease.

[Bsand8]

Answer to Question 1

The Tiebout hypothesis suggests that an efficient mix of public goods is produced when local land or housing prices and taxes come to reflect consumer preferences just as they do in the market for private goods.

Answer to Question 2

C

[asd123]

Excellent

[scottmt]

Gracias!