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3, Tim's Job pays him $10/hour. The current income tax rate is 25% and he chooses...
A person chooses between leisure and consumption. All of their consumption comes from current income. The...
A person chooses between leisure and consumption. All of their consumption comes from current income. The utility derived from any combination of leisure and consumption is given by U- YL-88Y where U is utility, L is the hours of leisure per week and Yis the number of dollars of income all of which will be spent on consumption. The person can work as many hours as they wish during the week at a constant wage of $4 per hour. There...
(10 marks) Consider the intertemporal model of consumption in which a consumer chooses between co...
(10 marks) Consider the intertemporal model of consumption in which a consumer chooses between consumption in the current period (Co) and consumption in the future period (C). Suppose individuals can borrow or save at constant interest rate, r. Suppose Jane has an initial endowment of Co in the current period and C, in the future period. Suppose Jane prefers to save some of her current income (amount S1) to finance an expensive vacation in the future period. 8. (2 marks)...
Here are all the information. You don't have to finish all the questions. You can just...
Here are all the information. You don't have to finish all the
questions. You can just do the parts you know.
3. Consider a person who chooses an amount of consumption c and non-working or leisure time R to maximize the utility function U(R,c) = 100R – R2 + c subject to the constraint c+wR=wL+M, where L is the maximum amount of time available (i.e., the maximum amount of leisure and labor supply possible) and M is the initial income...
3. Suppose you have 24 hours to allocate between leisure and working at $10 an hour....
3. Suppose you have 24 hours to allocate between leisure and working at $10 an hour. One day the government simultaneously institutes a new program consisting of two policies: a 50% income tax and a plan whereby everybody in the country receives a gift from the government of $60 a day. (a) Draw the two budget lines (you may draw a total of three budget lines since the program contains two separate parts.) (b) Suppose that the government chose the...
2. Xuan-Thuc is a taxpayer in a country with a flat tax rate of t. Her income for the current yea...
2. Xuan-Thuc is a taxpayer in a country with a flat tax rate of t. Her income for the current year is $1000. Therefore, if she declares her full income she will pay $1000t in tax, leaving her with $1000 (1- t) in post-tax income. If she chooses to declare less than her full income her fraud will be discovered if and only if she is audited by the tax authority, which happens with probability p. If an audit discovers...
1. Emilio buys pizza for $10 and soda for $2. He has income of $100. His...
1. Emilio buys pizza for $10 and soda for $2. He has income of $100. His budget constraint will experience a parallel outward shift if which of the following events occur? a. The price of pizza falls to $5, the price of soda falls to $1, and his income falls to $50. b. The price of pizza rises to $20, the price of soda rises to $4, and his income remains the same. c. The price of pizza falls to...
3. Jade is deciding how much to work in 2020. She derives utility from consumption,C, but...
3. Jade is deciding how much to work in 2020. She derives utility from consumption,C, but she also really likes taking leisure time L. She must divide her available hours between work and leisure. For every hour of leisure she takes, she must work one fewer hours (meaning that the price of leisure is her hourly wage). The function that describes her preferences is given by The marginal utilities are U(C, L) = C(1/2)L(1/2) MUC = 1C(−1/2)L(1/2)2 MUL = 1C(1/2)L(−1/2)2...
2. Xuan-Thuc is a taxpayer in a country with a flat tax rate of t. Her income for the current yea...
2. Xuan-Thuc is a taxpayer in a country with a flat tax rate of t. Her income for the current year is $1000. Therefore, if she declares her full income she will pay $1000t in tax, leaving her with $1000 (1- t) in post-tax income. If she chooses to declare less than her full income her fraud will be discovered if and only if she is audited by the tax authority, which happens with probability p. If an audit discovers...
2. (10 pts) Alvin is an avid mountaineer who enjoys climbing the peaks near his house...
2. (10 pts) Alvin is an avid mountaineer who enjoys climbing the peaks near his house in Boulder, Colorado. For Alvin, climbing trips are a good: more trips spent climbing are preferred to less. The State Park where Alvin climbs charges an annual fee of $100. To climb there at all, Alvin must pay the fee. Once he has paid the fee, he can climb as much as he wants. (a) Draw Alvin's budget constraint, placing "dollars on other stuff"...
2. Xuan-Thuc is a taxpayer in a country with a flat tax rate of t. Her income for the current yea...
2. Xuan-Thuc is a taxpayer in a country with a flat tax rate of t. Her income for the current year is $1000. Therefore, if she declares her full income she will pay $1000t in tax, leaving her with $1000 (1- t) in post-tax income. If she chooses to declare less than her full income her fraud will be discovered if and only if she is audited by the tax authority, which happens with probability p. If an audit discovers...
A person chooses between leisure and consumption. All of their consumption comes from current income. The utility derived from any combination of leisure and consumption is given by U- YL-88Y where U is utility, L is the hours of leisure per week and Yis the number of dollars of income all of which will be spent on consumption. The person can work as many hours as they wish during the week at a constant wage of $4 per hour. There...
(10 marks) Consider the intertemporal model of consumption in which a consumer chooses between consumption in the current period (Co) and consumption in the future period (C). Suppose individuals can borrow or save at constant interest rate, r. Suppose Jane has an initial endowment of Co in the current period and C, in the future period. Suppose Jane prefers to save some of her current income (amount S1) to finance an expensive vacation in the future period. 8. (2 marks)...
Here are all the information. You don't have to finish all the
questions. You can just do the parts you know.
3. Consider a person who chooses an amount of consumption c and non-working or leisure time R to maximize the utility function U(R,c) = 100R – R2 + c subject to the constraint c+wR=wL+M, where L is the maximum amount of time available (i.e., the maximum amount of leisure and labor supply possible) and M is the initial income...
3. Suppose you have 24 hours to allocate between leisure and working at $10 an hour. One day the government simultaneously institutes a new program consisting of two policies: a 50% income tax and a plan whereby everybody in the country receives a gift from the government of $60 a day. (a) Draw the two budget lines (you may draw a total of three budget lines since the program contains two separate parts.) (b) Suppose that the government chose the...
2. Xuan-Thuc is a taxpayer in a country with a flat tax rate of t. Her income for the current year is $1000. Therefore, if she declares her full income she will pay $1000t in tax, leaving her with $1000 (1- t) in post-tax income. If she chooses to declare less than her full income her fraud will be discovered if and only if she is audited by the tax authority, which happens with probability p. If an audit discovers...
2. Xuan-Thuc is a taxpayer in a country with a flat tax rate of t. Her income for the current year is $1000. Therefore, if she declares her full income she will pay $1000t in tax, leaving her with $1000 (1- t) in post-tax income. If she chooses to declare less than her full income her fraud will be discovered if and only if she is audited by the tax authority, which happens with probability p. If an audit discovers...
2. (10 pts) Alvin is an avid mountaineer who enjoys climbing the peaks near his house in Boulder, Colorado. For Alvin, climbing trips are a good: more trips spent climbing are preferred to less. The State Park where Alvin climbs charges an annual fee of $100. To climb there at all, Alvin must pay the fee. Once he has paid the fee, he can climb as much as he wants. (a) Draw Alvin's budget constraint, placing "dollars on other stuff"...
2. Xuan-Thuc is a taxpayer in a country with a flat tax rate of t. Her income for the current year is $1000. Therefore, if she declares her full income she will pay $1000t in tax, leaving her with $1000 (1- t) in post-tax income. If she chooses to declare less than her full income her fraud will be discovered if and only if she is audited by the tax authority, which happens with probability p. If an audit discovers...
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