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A. Describe whether each activity must be under control of federal, state, or local government, and describe why. a. Air pollution control regulations. b. Regulating solid waste landfills. c. Provision of weather satellites. d. Public refuses collection. e. Airport security.

B. Econometric study discovered that more ethnically diverse a country, more decentralized its public sector is likely to be, other things being same (Panizza, 1999). Is this result consistent with our theory of fiscal federalism?

C. David and Jonathan own identical homes. David has owned his home for many years and paid $100,000 for it. Jonathan bought his home after recent property tax increase and only paid $80,000 for his home. Must local assessor change the assessed value of Jonathan's home to keep horizontal equity? (Suppose there has been not inflation in housing prices since David bought his home and that David and Jonathan value equally all public services given in local community).

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