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In deciding to park in an illegal place, any individual knows that the probability of getting a ticket is p and the fine for receiving the ticket is f. Suppose that all individuals are risk averse (that is, U''(W)<0, where W is the individuals wealth).
Will a proportional increase in the probability of being caught or a proportional increase in the fine be a more effective deterrent to illegal parking? {Hint: Use the Taylor series approximation U(W-f)=U(W)- fU'(w)+ [f2/2]U''(W).}
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Go to the Bureau of Economic Analysis Web site, and access the BEA interactively through selecting National Accounts and then National Income and Product Account Tables
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