Calculate tax equilibrium quantity, Macroeconomics

Assignment Help:

1. Consider two projects.  The first project pays benefits of $90 today and nothing else.  The second project pays nothing today, nothing one year from now, but $100 two years from now.  Which project would be preferred if the discount rate were 0%?  What if the rate increased to 10%?

2. Suppose that the original before-tax demand curve is P = 98-2Qd and that supply is P = 2+2Qs.  Now suppose a $3 unit tax is imposed on consumers.
a.  Use supply and demand diagrams to show the effect of a $3-unit tax imposed on the demand side.         
b.  What is the before-tax equilibrium price and quantity?
c.  What is the after-tax equilibrium quantity?
d.  Calculate the economic incidence incurred by producers and the economic incidence incurred by consumers.
e.  How much tax revenue is raised?


Related Discussions:- Calculate tax equilibrium quantity

Economy could become stuck, According to Keynes, the economy could become s...

According to Keynes, the economy could become stuck at a low income level if: A. aggregate demand and aggregate supply are independent of one another. B. declines in aggregate dema

Inverse market supply curve, The inverse market demand curve for a good is ...

The inverse market demand curve for a good is p = 100? 0.25Q. the inverse market supply curve for the good is p = 20 + 0.55Q. Calculate the equilibrium price and quantity, consumer

International trade, difference between mercantilism and absolute advantage...

difference between mercantilism and absolute advantage

Show the adjustment process to new equilibrium using graph, Consider the mu...

Consider the multiplier model we have studied in class. Assume that the economy is initially in equilibrium and that real income is $180. The marginal propensity to expend is 0.66.

Product of demand curve, The demand curve for product X is given by QXd = 3...

The demand curve for product X is given by QXd = 340 - 4PX.\ a) How much consumer surplus do consumers receive when Px = $45? b) How much consumer surplus do consumers receiv

Calculate the duration of a par value bond with coupon rate, 1.  Calculate ...

1.  Calculate the duration of a par value bond with a coupon rate of 8% and a remaining time to maturity of 5 years. 2. On September 26, the spot price of gold was $320 per ounc

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd