Question

consider a specific example of the special-interest effect and the collective-action problem. in 2012 it was estimated that the total value of all corn production subsidies in the United States was about $3 billion . the population of the United States was approximately 300 million people per year?a. on average how much did corn subsidies cost per person in the United States in 2012?( hint: A billion is a 1 followed by nine zeros. A million is a a 1 followed by six zeros)b. if each in the United States is only willing to spend $0.50 to support efforts to overturn the corn subsidy and if antisubsidy advocates can only raise funds from 10 percent of the population, how much money will they be able to raise to support lobbying efforts ?c. if the recipient of corn subsidies donate just 1 percent of the amount that they receive in subsidies how much could they raise to support lobbying efforts to continue the corn subsidies?d. by how many dollars does the amount raised by the recipients of the corn subsidy exceed the amount raised by the opponents of the corn subsidy?

Answer 1

Answer with Explanation:

a. Cost Per Person of Corn Subsidies in United States can be obtained by simply dividing the total value of subsidies with the population of US.

$Cost\;per\;person\;=\;\frac{Total\;Value\;of\;subsidies}{Population\;of\;US}\\\\\\Cost\;per\;person\;=\;\frac{3\;billion}{300\;million}\\\\\\Cost\;per\;person\;=\;\frac{3,000,000,000}{300,000,000}\\\\\\Cost\;per\;person\;=\;\ 10$

b. First, let us calculate the number of people "N" that are will be funding the anti-subsidy advocates.

$N\;=\; 10\%\;*\;Population\;of\;US\\\\N\;=\;0.1\;*300,000,000\\\\N\;=\;30,000,000$

As each of the individual will only be paying $0.50 to support the anti-subsidy advocates, therefore, total funding will be,

$Anti-subsidy\;Funding\;=\;N\;*\;0.5\\\\Anti-subsidy\;Funding\;=\;30,000,000\;*\;0.5\\\\Anti-subsidy\;Funding\;=\;\ 15,000,000$

c. To calculate the donation amount we can simply multiply the total value of subsidies with the proportion of donation (1%)

$Donations\;of\;Subsidy \;Supporters\;=\;1\%\;*\;Total\;Values\;of\;Subsidies\\\\Donations\;of\;Subsidy \;Supporters\;=\;0.01\;*\;3,000,000,000\\\\Donations\;of\;Subsidy \;Supporters\;=\;\ 30,000,000$

d. Difference between the Donations of Supporters and the Funding of Anti-advocates will be

$Difference\;=\;Donations\;of\;Subsidy \;Supporters\;-\;Anti-subsidy\;Funding\\\\Difference\;=\;\ 30,000,000\;-\;\ 15,000,000\\\\Difference\;=\;\ 15,000,000$