Reference no: EM13893263
Problem: “Deadweight Loss of Taxation”
To many upscale homeowners, no other flooring offers the warmth, beauty, and value of wood. New technology in stains and finishes call for regular cleaning that takes little more than sweeping and/or vacuuming, with occasional use of a professional wood floor cleaning product. Wood floors are also ecologically friendly because wood is both renewable and recyclable. Buyers looking for traditional oak, rustic pine, trendy mahogany, or bamboo can choose from a wide assortment.
At the wholesale level, wood flooring is a commodity-like product sold with rigid product specifications. Price competition is ferocious among hundreds of domestic manufacturers and importers. Assume that market supply and demand conditions for mahogany wood flooring are:
QS = -10 + 2P (Market Supply)
QD = 320 - 4P (Market Demand)
Where Q is output in square yards of floor covering (000), and P is the market price per square yard.
a) Graph and calculate the equilibrium price/output solution before and after imposition of a $15 per unit tax.
b) Calculate the deadweight loss to taxation caused by imposition of the $15 per unit tax. How much of this deadweight loss was suffered by consumers versus producers? Explain.
|
Average product of labor and marginal product of labor
: At 36 units of labor, a firm finds that both average product of labor and marginal product of labor equal 42. We can conclude that the average product curve at 36 units of labor is
|
|
Average product of labor and marginal product of labor
: At 36 units of labor, a firm finds that both average product of labor and marginal product of labor equal 42. We can conclude that the average product curve at 36 units of labor is
|
|
The explicit cost of the firm-implicit costs
: During a year of operation, a firm collects $175,000 in revenue and spends $80,000 on raw materials, labor expense, utilities, and rent. The owners of the firm have provided $500,000 of their own money to the firm instead of investing the money and e..
|
|
Explain how a government budget deficit
: Illustrate and explain how a government budget deficit can lead to a higher real interest rate. Discuss how the effect of a budget deficit on the real interest rate could be altered by an increase in private savings.
|
|
Deadweight loss of taxation
: To many upscale homeowners, no other flooring offers the warmth, beauty, and value of wood. New technology in stains and finishes call for regular cleaning that takes little more than sweeping and/or vacuuming, with occasional use of a professional w..
|
|
Calculate the firms marginal and average cost functions
: The demand function for a firm’s product is Q(P) = 50-P/10. The firm’s cost of production is C(Q) = Q^3-20Q^2+125Q. The firm’s problem is to choose the value of Q≥0 that maximizes its profit. Calculate the firm’s inverse demand function. Calculate th..
|
|
Calculate the elasticity of demand
: The demand function for a firm’s product is Q = P^(-3). The firm’s marginal cost of production is constant at MC(Q) = 12. Calculate the elasticity of demand, as a function of Q.
|
|
Explain how trade between these three producers
: In this island economy, the (a) Orange Grove Owner likes only bananas and the (b) Banana Grower only likes Chocolate. Furthermore, the (c) Chocolate Maker only likes Oranges. Explain how trade between these three producers can occur. Will the Orange ..
|
|
Calculate the firms profit-maximizing price and quantity
: The demand function for a firm’s product is Q(P) = 50-P/10. The firm’s cost of production is C(Q) = Q^3-20Q^2+125Q. The firm’s problem is to choose the value of Q≥0 that maximizes its profit. Calculate the firm’s profit-maximizing price and quantity...
|