Question

orrupt officials may have an incentive to reduce the provision of government services to help line their own pockets. Suppose that the provincial construction supervisor decides to cut the total number of housing inspectors from 20 to 10 in order to decrease the supply of new housing permits. This decrease in the supply of permits raises the equilibrium bribe from $1,000 to $2,500. How much per year will the construction supervisor now receive if he is still getting half of all the bribes collected by the 10 inspectors? How much more is the construction supervisor getting now than when he had 20 inspectors working in part b? Will he personally be happy with the reduction in government services?

Answer 1

Instructions are listed below

Step-by-step explanation:

Giving the following information:

Suppose that the provincial construction supervisor decides to cut the total number of housing inspectors from 20 to 10 to decrease the supply of new housing permits.

This decrease in the supply of permits raises the equilibrium bribe from $1,000 to $2,500.

A) The supervisor will receive $1,250 per house.

We don't know how many houses per year are constructed. The formula is:

Bribe= 1250*X

X= number of houses constructed

B) Increase in bribe= 1250 - 500= $750

C) He will, now he charges a lot more than before.