Explain the derivation of the optimal commodity tax

Reference no: EM131209412

An economy has a single consumption good produced using labor and a single consumer. The production process has decreasing returns to scale. Explain the derivation of the optimal commodity tax when profit is not taxed.

Reference no: EM131209412

Questions Cloud

What does the industry attractiveness test involve : What does the industry attractiveness test involve in evaluating a diversified company's business lineup? Why is it relevant? Explain.

What is a fair value of this share today : A share just paid a dividend of $0.50. The dividend is expected to increase at an annual rate of 5% forever. If the required return is 15%, what is a fair value of this share today?

Evaluation of the impact of globalization : Support and justify the evaluation of the impact of globalization on the value chain by including information related to:

Can financial prices ever overshoot or undershoot : What is a "bubble" in a financial market? - Can financial prices ever overshoot or undershoot optimal values?

Explain the derivation of the optimal commodity tax : An economy has a single consumption good produced using labor and a single consumer. The production process has decreasing returns to scale. Explain the derivation of the optimal commodity tax when profit is not taxed.

Evaluate financial situation : 1) A Manufacturing Company has hired an economist to evaluate its financial situation. She explains to the board of directors that the company is making zero economic profit. Should the company go out of business?

What are stocks and bonds : Question 1: What are Stocks and Bonds? Describe how you could estimate their values. If you are investing in the stock market, which would you invest in and why?

What will happen to its equilibrium return : News comes out that leads investors to believe that there is more risk involved with owning financial instrument A.- What will happen to its equilibrium return?

Examine the key information you would look for in a company : Imagine you are considering investing in a corporation. Examine the key information you would look for in a company's financial statements and explain why this information would be important to you.

User Account

All Pages