Macroeconomics 20th Edition by Campbell McConnell ,Stanley Brue ,Sean Flynn

Exercise 12

Political advertising is often directed at winning over socalled swing voters, whose votes might go either way. Suppose that two political parties-the Freedom Party and the Liberty Party-disagree on whether to build a new road. Polling shows that of 1,000 total voters, 450 are firmly for the new road and 450 are firmly against the new road. Thus, each party will try to win over a majority of the 100 remaining swing voters.
a. Suppose that each party spends $5,000 on untargeted TV, radio, and newspaper ads that are equally likely to reach any and all voters. How much per voter will be spent by both parties combined?
b. Suppose that, instead, each party could direct all of its spending toward just the swing voters by using targeted ads that exploit Internet social media. If all of the two parties' combined spending was targeted at just swing voters, how much would be spent per swing voter?
c. Suppose that only the Freedom Party knows how to target voters using social media. How much per swing voter will it be spending? If at the same time the Liberty Party is still using only untargeted TV, radio, and newspaper ads, what portion of its total spending is likely to be reaching the 100 swing voters? How much per swing voter does that portion amount to?
d. Looking at your answers to part c , how much more per swing voter will the Freedom Party be spending than the Liberty Party? If spending per swing voter influences elections, which party is more likely to win?