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Consider a world economy composed of two countries, A and B. There is a fixed world population of size H that allocates between countries on the basis of the utility levels offered. Each consumer is characterized by a parameter x that measures their attachment to country A (and by 1 - x, which is their attachment to country B). The parameter x is distributed uniformly across the population with values from 0 to 1. Let the utility level in country A of a consumer with attachment x be equal to M - x - tA, where tA is the tax rate in country A (and so utility in B is M - [1- x] - tB). Assume that there always exists a value of x that partitions the population between those who choose country A and those who choose country B.
a. For given tax levels in the two countries, determine the value of x at which the population partitions.
b. For a given partition of population, state the budget constraint for the government in each country.
c. Using the answers to parts a and b, state the decision problems of the two governments when they act as independent ‘‘leviathans'' and attempt to maximize revenue. What is the equilibrium level of taxes?
d. What are the ancient taxes that maximize the sum of tax revenues?
e. What are the implications of these findings for tax policy?
Consider a simple economy where 90 percent of citizens report an annual income of $10,000 while the remaining 10 percent report an annual income of $110,000. What is the Gini coefficient associated with this economy
It is more useful to express the OPE as a function of [NOx] rather than as a function of [NO2] because of the rapid cycling between NO and NO2. Explain qualitatively your result. Does this dependence hinder or enhance the effectiveness of NOx emissi..
The controller's assistant, Dongsung Young, who, a Certified Public Accountant (CPA), is asked to write the first draft of the internal control portion of the report.
John has a weekly endowment of 140 dollars that he spends on buying games (G) and music cds (M). The price of each game is 30 dollars, the price of each cd is 20 dollars. He can buy any amount of the two goods that satisfies the budget
Derive the contract curve as an implicit function of .What condition on the coefficients and ß will ensure that the contract curve isa straight line?
A building is priced at $125,000. If a down pament of $25,000 is made and a payment of $1,200 every month thereafter is required, how many months will it take to pay for the building. Interest is charged at a rate of 9% compounded monthly.
Suppose that currency in circulation is $600 billion, the amount of checkable deposits is $900 billion, excess reserves are $15 billion, and the required reserve ratio on checkable deposits is 10%. Calculate the money supply, the currency deposit r..
A monopolist has the following short-run total cost function and demand function Total Cost: TC = 32 + 2Q + 1/2Q^2 Marginal Cost: MC = 2 + Q Demand: Q = 52-2P where P is the price per unit of output, and Q is the quantity of output.
Can you think of any possible explanations for this puzzle?
You need $100,000 in equity, which you can withdraw from your bank account that is currently paying 2% per year in interest, and a $400,000 loan with a 15% interest rate. What is your expected pretax accounting profit from your proposed agency.
Given the game that was played in the experiment (i.e. h=0.5, v=10, cl = 2, ch = 6), what would be the payoffs to two players, if player 1 (the seller) posts price pl = 6 and ph = 8, player 2 (the customer) accepts if, neither liability nor verifiabi..
The generalized demand function for good A is: Qd = 600 - 4PA - 0.03M - 12PB + 15F + 6Pe + 1.5N where Qd = quantity demanded of good A each month, PA = price of good A, M = average household income, PB = price of related good B, F = consumer taste..
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