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President Alcazar announced an increase in the labor subsidy given to firms to try to boost employment and GDP. The subsidies received by a firm are in proportion to the number of workers it employs, that is equal to s N, where s is the subsidy rate and N the number of workers employed. The government pays subsidies to firms, whose post-subsidy profits are distributed to households as income. However, the subsidies are financed by a lump-sum tax on households. The lump-sum tax is such that the government budget is balanced. Show that, for any given level of real wages, the net direct effect of this policy, subsidies and corresponding lump-sum taxes, on household’s disposable income is negative.
Karen runs a print shop that makes posters for large companies. It is a very competitive business. The market price is currently $1.00 per poster. She has fixed costs of $100.00. Her variable costs are $1,500 for the first thousand posters, $1,200 fo..
Suppose the production function for oranges is Q = k^1/3 L^1/3. Suppose the production function for pasta is Q = 4kl. What is the long-run optimal input combination when Q = 16 , r = 4, and w = 36 ? Does this cost function have increasing or decreasi..
What factors effect the demand for a smart phone? What are the substitutes for the iPhone; What do they cost? How does this impact demand for the iPhone?
DeVito Company operates in a state where corporate taxes and workmen's compensation insurance rates have recently doubled. DeVito's president has assigned you the task of preparing an economic analysis and making a recommendation about whether to mov..
q.suppose that the supply curve of healthcare ser-vices is perfectly inelastic i.e. vertical. analyze the impact of an
q1. disposable personal income equals personal incomea. minus government transfer payments plus personal tax
As people have more time to adjust to a price change,
Analysts have estimated the present values of the following effects over the expected useful life of the pool: PV (million dollars) State grant: 2.2 Construction and maintenance costs: 12.5 Personnel costs: 8.2 Revenue from county residents: 8.6 Reve..
You are buying a bond at a quoted price of $892. The bond has a 7.5 percent coupon and pays interest semi annually on February 1 and August 1. What is the dirty price of this bond if today is April 1. Assume a 360-day year.
Mention three businesses that you are familiar with or that you have dealt with recently. Decide on which market structure that these businesses fit – perfect competition, monopolistic competition, oligopoly, or monopoly. What characteristics were mo..
While you were an intern you bought 5 packages of hot dogs a month. After acquiring a full-time job with a considerably higher salary, you stopped purchasing hot dogs. Explain this behavior. 7. An investor has to choose between stocks A&B, each selli..
Classify each of the following statements as positive or normative. Explain. Society faces a short-run trade-off between inflation and unemployment. a reduction in the rate of money growth will reduce the rate of inflation. The Federal Reserve should..
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