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  3. 3 lets analyze 3 states each following one of the...

Question: 3 lets analyze 3 states each following one of the...

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3. Let’s analyze 3 states, each following one of the 3 options. Indiana – has a state agency for drafting bills and use of the agency is mandatory Texas – has a state agency for drafting bills and use of the agency is optional State X – does not have a state agency for drafting bills Which of these best describes how error costs will be different between Indiana and State X? A.Indiana has cSB and does not have cR while State X has cR and does not have cSB.

B.Indiana has cSB and State X doesn't.

C.Indiana has cR and does not have cSB while State X has cSB and does not have cR.

D.Error costs for State X will depend on how many laws are drafted using the state drafting agency.

4.What additional information is needed to make an economic model for Texas so that it can be compared to Indiana and State X? Think in particular about administrative costs.

A. What percentage of laws are not drafted using the state drafting agency (call this X).

B.How difficult it is to amend the state constitution.

C.When was the state drafting agency formed.

D.What the marginal income tax rate is in the state.

5. Match the state with the formula that best models its situation.

min SC =( cD + cSB) + (-R –B)

min SC =( cD + cR(X) + cSB) + (-R –B)

min SC =( cD + cR) + (-R –B)

A. Texas B. Indiana C. State X

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