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

Current macroeconomics problems, In order to encourage you to take interest...

In order to encourage you to take interests in the current affairs in business, and have more concerns about the real world problems (which is what economics is about), you are req

How do reductions in government spending affect the economy, Usually the go...

Usually the government is very good at wasting money and resources so less spending, by the government helps the economy as those resources are allocated in areas that are more wel

Demand for money - theories, The amount of wealth that households and busin...

The amount of wealth that households and business desire to hold in the form of money balances is called the 'demand for money'. Individuals and firms have at their command only

Illustrate diffrent types of interest rates, Q. Illustrate diffrent types o...

Q. Illustrate diffrent types of interest rates? There are many other interest rates in a society. For instance, you will earn interest when you deposit money in a bank account

Interest rates, what is real and norminal interest rates?

what is real and norminal interest rates?

Overall effect of a change in real wages, Q. Overall effect of a change in ...

Q. Overall effect of a change in real wages? The supply of labor The supply of labour L S is assumed to be positively related to the real wage W/P

Develop the null and alternative hypotheses, Because of high production-cha...

Because of high production-changeover time and costs, a director of manufacturing must convince management that a proposed manufacturing method reduces costs before the new method

Problem with the keynesian model, The problem with the Keynesian model ...

The problem with the Keynesian model We can classify two problems with the Keynesian model as developed so far: 1. Π is exogenous. Although inflation may temporarily deviate

Crowding out is associated, Crowding out is associated with: A. an increase...

Crowding out is associated with: A. an increase in business investment resulting from an increase in government borrowing and higher interest rates. B. an increase in private savin

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