5. a) Suppose the government imposes a producer tax: the firm pays t units of consumption...
5. a) Suppose the government imposes a producer tax: the firm pays t units of consumption
goods to the government for each unit of output it produces. Determine the effect of this tax
on the firm’s demand for labour.
b) Repeat (a) in the case of an employment subsidy, where the government pays the firm
s units of consumption goods for each unit of labour that the firm hires.
Homework Answers
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5. a) Suppose the government imposes a producer tax: the firm
pays t units of consumption...
2. Suppose that the government subsidizes employment. That is, the government pays the firm's units of...
2. Suppose that the government subsidizes employment. That is, the government pays the firm's units of consumption goods for each unit of labor the firm hires. For example, if firms hire Nd workers, the government gives subsidies qNd to the firm. The market wage is given by w. (a) Setup firm's prot maximization problem. (b) Derive firm's optimal labor demand Nd. Comparing to no-subsidy case, does firm hire more workers, less workers or remain unchanged? (c) How is the labor...
Suppose the government imposes a tax on labor income. Which of the following describe the effect...
Suppose the government imposes a tax on labor income. Which of the following describe the effect of the tax in the labor market? I f the demand for labor is more elastic than the supply, workers will bear more of the tax. Employment is not affected because workers need jobs. ill. The tax creates a deadweight loss. i only Ill and ili i only Oil and it i and ill only
Now suppose that the government imposes a $2 tax per case on the sellers of microwave...
Now suppose that the government imposes a $2 tax per case on the sellers of microwave popcorn. The graph below shows the effects of this tax. Supply Demand 100 200 300 400 500 600 700 800 900 Quantity Using the information in the graph above, identify each of the following (after the tax is imposed): e. the new equilibrium price and quantity f. price paid by buyers g. price received by sellers h. consumer surplus i. producer surplus j. government...
4. (20 points) Suppose that, in the basic one-period model, there is no government spending and...
4. (20 points) Suppose that, in the basic one-period model, there is no government spending and no taxes. Production by the representative firm produces pollution in proportion to the amount of output produced. Given any consumption bundle (a consumption-leisure pair), the consumer is worse of the more pollution there is. a. In a diagram, show the competitive equilibrium and the Pareto optimum. Show that the competitive equilibrium is not Pareto optimal, and explain why. Is more or less output produced...
Refer to Figure: Supply and Demand Suppose the government imposes a tax of $6 on consumers....
Refer to Figure: Supply and Demand Suppose the
government imposes a tax of $6 on consumers. Which statement is
correct?
a.
Consumers will pay $16, the producer will receive $10, and total
surplus decreases by $6.
b.
Consumers will pay $14, the producer will receive $8, and total
surplus decreases by $6.
c.
Consumers will pay $14, the producer will receive $8, and total
surplus decreases by $24.
d.
Consumers will pay $16, the producer will receive $10, and total...
Suppose that the demand curve for wheat is Qd= 400-10p Qs= 10p The government provides producers with a specific subsidy...
Suppose that the demand curve for wheat is Qd= 400-10p Qs= 10p The government provides producers with a specific subsidy of S=$11 per unit. How do the equilibrium price and quantity change? The equilibrium price by $_______ and the equilibrium quantity by $_______ units. (Enter numeric responses using real numbers rounded to two decimal places.) What effect does this tax (subsidy) have on consumer surplus, producer surplus, government revenue, welfare, and deadweight loss? Consumer surplus (increase or decrease) by $...
Refer to Figure: Supply and Demand Suppose the government imposes a tax of $6 on consumers. Which statement is correct?
Refer to Figure: Supply and Demand Suppose the government imposes a tax of $6 on consumers. Which statement is correct?a. Consumers will pay $14, the producer will receive $8, and total surplus decreases by $24. b. Consumers will pay $16, the producer will receive $10, and total surplus decreases by $6. c. Consumers will pay $14, the producer will receive $8, and total surplus decreases by $6. d. Consumers will pay $16, the producer will receive $10, and total surplus decreases by $24.
Suppose the government imposes a $4-per-pack tax on suppliers.
4. The Laffer curveGovernments often place so-called sin taxes on goods or services such as cigarettes and alcohol. These kinds of taxes are popular with politicians because they are usually more palatable to voters than income taxes.To understand the effect of such a tax, consider the monthly market for cigarettes, which is shown on the following graph.Use the graph input tool to help you answer the following questions. You will not be graded on any changes you make to this...
Suppose the government imposes a $20-per-bottle tax on suppliers.
Suppose the government imposes a $20-per-bottle tax on suppliers.At this tax amount, the equilibrium quantity of gin is _______ bottles, and the government collects $_______ in tax revenue.Now calculate the government's tax revenue if it sets a tax of 50, $20, $40, $50, $60, $80, or $100 per bottle. Hint: To find the equilibrium quantity after the tax, adjust the "Quantity" field until the Tax equals the value of the per-unit tax.) Using the data you generate, plot a Laffer...
Hats are produced in a perfectly competitive industry, and the government imposes a per-unit sales tax...
Hats are produced in a perfectly competitive industry, and the government imposes a per-unit sales tax on hats. (a) Using the labeling from the graph, identify each of the following. (i) The after-tax price paid by consumers and the after-tax quantity (ii) The area representing the total tax revenue received by the government (b) Now assume instead that the demand for hats is perfectly inelastic at Q3, while the supply and the per-unit tax remain unchanged. (i) Will the after-tax...
Suppose the government imposes a tax on labor income. Which of the following describe the effect of the tax in the labor market? I f the demand for labor is more elastic than the supply, workers will bear more of the tax. Employment is not affected because workers need jobs. ill. The tax creates a deadweight loss. i only Ill and ili i only Oil and it i and ill only
Now suppose that the government imposes a $2 tax per case on the sellers of microwave popcorn. The graph below shows the effects of this tax. Supply Demand 100 200 300 400 500 600 700 800 900 Quantity Using the information in the graph above, identify each of the following (after the tax is imposed): e. the new equilibrium price and quantity f. price paid by buyers g. price received by sellers h. consumer surplus i. producer surplus j. government...
4. (20 points) Suppose that, in the basic one-period model, there is no government spending and no taxes. Production by the representative firm produces pollution in proportion to the amount of output produced. Given any consumption bundle (a consumption-leisure pair), the consumer is worse of the more pollution there is. a. In a diagram, show the competitive equilibrium and the Pareto optimum. Show that the competitive equilibrium is not Pareto optimal, and explain why. Is more or less output produced...
Refer to Figure: Supply and Demand Suppose the
government imposes a tax of $6 on consumers. Which statement is
correct?
a.
Consumers will pay $16, the producer will receive $10, and total
surplus decreases by $6.
b.
Consumers will pay $14, the producer will receive $8, and total
surplus decreases by $6.
c.
Consumers will pay $14, the producer will receive $8, and total
surplus decreases by $24.
d.
Consumers will pay $16, the producer will receive $10, and total...
Suppose the government imposes a $20-per-bottle tax on suppliers.At this tax amount, the equilibrium quantity of gin is _______ bottles, and the government collects $_______ in tax revenue.Now calculate the government's tax revenue if it sets a tax of 50, $20, $40, $50, $60, $80, or $100 per bottle. Hint: To find the equilibrium quantity after the tax, adjust the "Quantity" field until the Tax equals the value of the per-unit tax.) Using the data you generate, plot a Laffer...
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