Hotelling's model has been used to describe differentiation in the political "market." Suppose that 100 voters are evenly distributed between the extreme left and the extreme right on the political spectrum, and that all voters vote, and they always vote for the candidate closest to them on this spectrum. The numbers on this spectrum represent the number of voters lying to the left of the number. So, at the midpoint, fifty voters lie to the left and fifty to the right. At the extreme right end, all 100 voters lie to the left. 
width="553" />If Candidate Y is running against Candidate Z:
A. Neither candidate has any incentive to move.
B. Both candidates will have an incentive to move to the left.
C. Candidate Y will have an incentive to move to the left, and Candidate Z will have an incentive to move to the right.
D. Both candidates will have an incentive to move toward each other's position.
Answer: D
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The above figures show the market for HD televisions. If people's incomes increase and HD televisions are a normal good, which figure shows the effect of this change?
A) Figure A B) Figure B C) Figure C D) Figure D E) None of the figures represent this change.
Contractionary fiscal policy should be used if:
A) aggregate demand-aggregate supply equilibrium is below potential output. B) aggregate demand-aggregate supply equilibrium is above potential output. C) aggregate demand-aggregate supply equilibrium is equal to potential output. D) none of the above.