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On a particular product, government economists determine that the relationship between tax rate t and the...
The Laffer Curve graphs the amount of government revenue as a function of the tax rate....
The Laffer Curve graphs the amount of government revenue as a function of the tax rate. It is hypothesized to be inverse U-shaped -- first increasing, reaching a maximum, and then decreasing. The maximum of the Laffer curve represents the largest size of government that can be sustained, because beyond it, higher tax rates actually reduce government revenue. Consider a consumer with preferences U = ln(x) + ln(1 − ℓ), where x is consumption and ℓ is labor supply. Let...
We have two goods A and B and the government plans to collect X by imposing tax rate t on these two goods. The marginal...
We have two goods A and B and the government plans to collect X by imposing tax rate t on these two goods. The marginal costs of both goods are 10. The demand curves of two goods are pA = 20 - QA pB = 50 - 2QB (a) Given tax rate tA and tB, calculate the tax revenues of two goods. (b) Given tax rate tA and tB, calculate the excess burdens of tax of two goods. (c) Calculate...
3. The market illustrated below has inverse demand p(Q) = 130 - 3Q and industry-wide marginal...
3. The market illustrated below has inverse demand p(Q) = 130 - 3Q and industry-wide marginal cost MCQ) = 10 + 2Q. If production is competitive, this is the market (inverse) supply curve. If production is consolidated under a monopolist, this is the monopolist's MC curve. a. Suppose there is a monopolist. Explain how marginal revenue for a monopolist is different than for a firm under perfect competition. Then derive the profit-maximizing market outcome (including the monopoly price and quantity...
3. A monopolist chooses output (x) to maximize profit (T) where r(x) = p(x)x-c(x) In this...
3. A monopolist chooses output (x) to maximize profit (T) where r(x) = p(x)x-c(x) In this equation, p(x) denotes the price of x and c(x) is the cost of producing x. Since demand curves are downward sloping, we assume that p,(x) <0. In addition, we will assume that marginal cost is positive and non-decreasing; that is, c'(x) > 0 and c"(x) 2 0. Derive a condition on the demand curve such that marginal revenue is downward sloping. Derive the first...
have, it's That's really all I have, in fact, I've figured out the questions A,B,C, but...
have, it's That's really all I
have, in fact, I've figured out the questions A,B,C, but I don't
know how to approach the rest of the question.
Practice Problem 2: Crash Course in Optimization: Part II 1. Consider a monopolist who pays an output tax $t for each unit of output produced. Thus, total tax payments are simply tQ, where is the quantity produced. Suppose the government is considering increasing the tax. Some people have argued that, because the firm...
Question #5: (10 points) Suppose that a monopolist produces an identical product in three plants and...
Question #5: (10 points) Suppose that a monopolist produces an identical product in three plants and face an inverse demand function P = 40 - QF = Q, + Q, +Q,. The output from the three plants is where total quantity in all three plants is Q produced at the costs c = Q + Q C₂ = 30, z = 2Q - Qz where C refers to the total cost required to produce Q, units from each facility, i...
Macroecomics multiple choice a) Other things constant, if the government cuts the net tax rate, lowering NT from NT = t...
Macroecomics multiple
choice
a) Other things constant, if the government cuts the net tax rate, lowering NT from NT = tọY to NT = t,Y we would expect: an upward shift of the aggregate expenditure curve an increase in the slope the aggregate expenditure curve. a movement down and along the aggregate expenditure curve. O a decrease in the slope of the aggregate expenditure curve b) In an open economy with imports described by the import function: IM 0.25Y and...
Please answer question a Question 2: The consumption function with taxes that change over time To...
Please answer question a
Question 2: The consumption function with taxes that change over time To do this question you need to be familiar with the Appendix to chapter 4, which deals with the determination of the two period consumption and is on the class website (see OnQ). Households must decide how much they wish to spend on consumption today ((1+1Jel) versus consumption in the future (0+τ)G), where t is the rate of taxation on consumption (HST). Households are constrained...
1.Consider a closed economy with no taxes, whose consumption function, investment level & government spending level...
1.Consider a closed economy with no taxes, whose consumption function, investment level & government spending level are given by the following equations: C= 5,000 + .80Y I= 9,000 G= 2000 whereGrepresents government spending. The equilibrium condition is, as always, that the value of the economy’s output (Y) must be matched by aggregate demand, but now aggregate demand contains a third element, G. a. What is the equilibrium level of aggregate output for this economy? b. What is the saving function for this...
H. = H, = H (6) You are to assume that H , the long-run demand...
H. = H, = H (6) You are to assume that H , the long-run demand for housing, is equal to the demand for housing you found in part 1. Using this, write out expressions for the two semi-elasticities of long-run house prices in terms of each tax rate. 3. What do your equations for the short- and long-run semi-elasticities say about the reaction of house prices in each period? Briefly describe what is happening. 4. The government wants to...
3. The market illustrated below has inverse demand p(Q) = 130 - 3Q and industry-wide marginal cost MCQ) = 10 + 2Q. If production is competitive, this is the market (inverse) supply curve. If production is consolidated under a monopolist, this is the monopolist's MC curve. a. Suppose there is a monopolist. Explain how marginal revenue for a monopolist is different than for a firm under perfect competition. Then derive the profit-maximizing market outcome (including the monopoly price and quantity...
3. A monopolist chooses output (x) to maximize profit (T) where r(x) = p(x)x-c(x) In this equation, p(x) denotes the price of x and c(x) is the cost of producing x. Since demand curves are downward sloping, we assume that p,(x) <0. In addition, we will assume that marginal cost is positive and non-decreasing; that is, c'(x) > 0 and c"(x) 2 0. Derive a condition on the demand curve such that marginal revenue is downward sloping. Derive the first...
have, it's That's really all I
have, in fact, I've figured out the questions A,B,C, but I don't
know how to approach the rest of the question.
Practice Problem 2: Crash Course in Optimization: Part II 1. Consider a monopolist who pays an output tax $t for each unit of output produced. Thus, total tax payments are simply tQ, where is the quantity produced. Suppose the government is considering increasing the tax. Some people have argued that, because the firm...
Question #5: (10 points) Suppose that a monopolist produces an identical product in three plants and face an inverse demand function P = 40 - QF = Q, + Q, +Q,. The output from the three plants is where total quantity in all three plants is Q produced at the costs c = Q + Q C₂ = 30, z = 2Q - Qz where C refers to the total cost required to produce Q, units from each facility, i...
Macroecomics multiple
choice
a) Other things constant, if the government cuts the net tax rate, lowering NT from NT = tọY to NT = t,Y we would expect: an upward shift of the aggregate expenditure curve an increase in the slope the aggregate expenditure curve. a movement down and along the aggregate expenditure curve. O a decrease in the slope of the aggregate expenditure curve b) In an open economy with imports described by the import function: IM 0.25Y and...
Please answer question a
Question 2: The consumption function with taxes that change over time To do this question you need to be familiar with the Appendix to chapter 4, which deals with the determination of the two period consumption and is on the class website (see OnQ). Households must decide how much they wish to spend on consumption today ((1+1Jel) versus consumption in the future (0+τ)G), where t is the rate of taxation on consumption (HST). Households are constrained...
H. = H, = H (6) You are to assume that H , the long-run demand for housing, is equal to the demand for housing you found in part 1. Using this, write out expressions for the two semi-elasticities of long-run house prices in terms of each tax rate. 3. What do your equations for the short- and long-run semi-elasticities say about the reaction of house prices in each period? Briefly describe what is happening. 4. The government wants to...
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