Taxes
... The Labor Market and the Minimum Wage If the minimum wage is set above the equilibrium wage rate, the quantity of labor supplied by workers exceeds the quantity demanded by employers. There is a surplus of labor. Because employers cannot be forced to hire a greater quantity than they wish, the quan ...
... The Labor Market and the Minimum Wage If the minimum wage is set above the equilibrium wage rate, the quantity of labor supplied by workers exceeds the quantity demanded by employers. There is a surplus of labor. Because employers cannot be forced to hire a greater quantity than they wish, the quan ...
Externalities, Environmental Policy, and Public Goods
... In England during the Middle Ages, each village had an area of pasture, known as a commons, on which any family in the village was allowed to graze its cows or sheep without charge. Since the grass that one cow ate was not available to another cow, consumption was rival. But every family in the vill ...
... In England during the Middle Ages, each village had an area of pasture, known as a commons, on which any family in the village was allowed to graze its cows or sheep without charge. Since the grass that one cow ate was not available to another cow, consumption was rival. But every family in the vill ...
Sample Exam Questions/Chapter 16 1. Suppose an emissions tax is
... A) there will be too little pollution. B) there will be too much pollution. C) the marginal social cost of pollution will be less than the marginal social benefit of pollution. D) there could be either too much or too little pollution. 6. If the marginal benefit received from pollution is less than ...
... A) there will be too little pollution. B) there will be too much pollution. C) the marginal social cost of pollution will be less than the marginal social benefit of pollution. D) there could be either too much or too little pollution. 6. If the marginal benefit received from pollution is less than ...
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... A) impose a tax on Oscar's production of processed meat, since the market quantity is less than the socially optimal quantity. B) subsidize Oscar's production of processed meat, since the market quantity is greater than the socially optimal quantity. C) subsidize Oscar's production of processed meat ...
... A) impose a tax on Oscar's production of processed meat, since the market quantity is less than the socially optimal quantity. B) subsidize Oscar's production of processed meat, since the market quantity is greater than the socially optimal quantity. C) subsidize Oscar's production of processed meat ...
Problem Set 1 - uc
... soaring up), then the raising of property and income tax rates would not be good solution. How about the other taxes such as Capital Gain tax, Acquisition Tax, and Registration Tax? Note that all these taxes increase transaction cost. Thus, these kinds of taxes can make lock-in effect and the supply ...
... soaring up), then the raising of property and income tax rates would not be good solution. How about the other taxes such as Capital Gain tax, Acquisition Tax, and Registration Tax? Note that all these taxes increase transaction cost. Thus, these kinds of taxes can make lock-in effect and the supply ...
add-on 15a deadweight loss of a specific tax with income effects
... from taxation in that way. Using ordinary demand curves can give a reasonable approximation when income effects are small. But what if they are large? How should we measure the deadweight loss in that case? We can think of the deadweight loss from a tax as the amount by which tax revenue falls short ...
... from taxation in that way. Using ordinary demand curves can give a reasonable approximation when income effects are small. But what if they are large? How should we measure the deadweight loss in that case? We can think of the deadweight loss from a tax as the amount by which tax revenue falls short ...
File
... The Rule of Tax Incidence: Generalization The burden tends to fall on the side of the market that is less elastic: The more elastic the supply, the larger is the amount of tax paid by the buyer and vice versa Sales tax is generally applied to items with a low elasticity of demand (alcohol, tobacc ...
... The Rule of Tax Incidence: Generalization The burden tends to fall on the side of the market that is less elastic: The more elastic the supply, the larger is the amount of tax paid by the buyer and vice versa Sales tax is generally applied to items with a low elasticity of demand (alcohol, tobacc ...
Midterm Exam 2 (F2008)
... provide. Please number your answers clearly. Each question will be worth 20 points, and each part of each question will be weighted as indicated, so allocate your time accordingly. The exam is “closed book – closed notes.” You may use a calculator, although you shouldn’t need one. Note that the unde ...
... provide. Please number your answers clearly. Each question will be worth 20 points, and each part of each question will be weighted as indicated, so allocate your time accordingly. The exam is “closed book – closed notes.” You may use a calculator, although you shouldn’t need one. Note that the unde ...
Chapter 6 - Elasticity and Taxes
... • If binding, these price controls don’t allow the market to reach equilibrium. • Shortages or surpluses will be the result. ...
... • If binding, these price controls don’t allow the market to reach equilibrium. • Shortages or surpluses will be the result. ...
Lecture on Household Sorting and Public Goods
... costs, so those costs don’t get paid off until the scale of operation gets very large • Private firms would underprovide service because high scale economies mean that average cost> marginal cost • City must step in and make up deficit ...
... costs, so those costs don’t get paid off until the scale of operation gets very large • Private firms would underprovide service because high scale economies mean that average cost> marginal cost • City must step in and make up deficit ...
Ch06 Govt actions in markets
... Everything you earn and most things you buy are taxed. Who really pays these taxes? Income tax and the social insurance taxes are deducted from your pay, and provincial sales tax and GST are added to the price of the most of the things you buy, so isn’t it obvious that you pay these taxes? Isn’t ...
... Everything you earn and most things you buy are taxed. Who really pays these taxes? Income tax and the social insurance taxes are deducted from your pay, and provincial sales tax and GST are added to the price of the most of the things you buy, so isn’t it obvious that you pay these taxes? Isn’t ...
Price Ceilings, Price Floors, and Excise Taxes
... The next (hidden) slide shows these principles for different elasticities of demand. When demand is more elastic: ...
... The next (hidden) slide shows these principles for different elasticities of demand. When demand is more elastic: ...
NAME
... thousand of those families would be willing to pay as much as $6,000 for a private school education for their child. There are 200 entrepreneurs willing to open a private school. Each school would enroll 100 students. Sixty of those entrepreneurs are willing to operate a private school is they recei ...
... thousand of those families would be willing to pay as much as $6,000 for a private school education for their child. There are 200 entrepreneurs willing to open a private school. Each school would enroll 100 students. Sixty of those entrepreneurs are willing to operate a private school is they recei ...
Phillips/Econ Winter 2012 Casual Users, Substance Abusers, and
... pass it on to their newborn child, directly in the case of the mother-addict or indirectly for the father-addict who also may infect the mother. Certainly with this example, we are no longer talking about "victimless" behavior. So how are we to choose between market solutions versus criminalization ...
... pass it on to their newborn child, directly in the case of the mother-addict or indirectly for the father-addict who also may infect the mother. Certainly with this example, we are no longer talking about "victimless" behavior. So how are we to choose between market solutions versus criminalization ...
4. Below is a hypothetical market for oranges. $0.20 $0.40 $0.60
... (a) (5 points) Show the impact of this tax on the supply and demand curves above. (b) (5 points) Explain (as if to a non-economist) why the tax shifts the curves the way it does. At a market price of, say, $1.00, buyers have to pay an extra $.40 in tax, so they are effectively paying $1.40 per pound ...
... (a) (5 points) Show the impact of this tax on the supply and demand curves above. (b) (5 points) Explain (as if to a non-economist) why the tax shifts the curves the way it does. At a market price of, say, $1.00, buyers have to pay an extra $.40 in tax, so they are effectively paying $1.40 per pound ...
Review Questions Part 2
... 6.9 How is the tax burden shared between buyers and sellers if a tax is levied in a market with elastic demand and inelastic supply? Use a graph to illustrate! 6.10 How is the tax burden shared between buyers and sellers if a tax is levied in a market with inelastic demand and elastic supply? Use a ...
... 6.9 How is the tax burden shared between buyers and sellers if a tax is levied in a market with elastic demand and inelastic supply? Use a graph to illustrate! 6.10 How is the tax burden shared between buyers and sellers if a tax is levied in a market with inelastic demand and elastic supply? Use a ...
Supply and Demand: Applications and Extensions
... Rent Seeking, Politics, and Elasticities • The possibility of transferring surplus from one set of individuals to another causes people to spend time and resources on doing so. • Lobbying for price controls, which transfer surplus from one group to another, is an example of rentseeking behavior ...
... Rent Seeking, Politics, and Elasticities • The possibility of transferring surplus from one set of individuals to another causes people to spend time and resources on doing so. • Lobbying for price controls, which transfer surplus from one group to another, is an example of rentseeking behavior ...
Chapter seven slides
... deadweight loss arises. Firms that cut back employment and by people who can’t find jobs at the higher wage rate lose. The total loss exceeds the deadweight loss because resources get used in costly job-search activity. ...
... deadweight loss arises. Firms that cut back employment and by people who can’t find jobs at the higher wage rate lose. The total loss exceeds the deadweight loss because resources get used in costly job-search activity. ...
PROGRAM ON HOUSING AND URBAN POLICY WORKING PAPER SERIES
... However, the principal difference between the economic analysis of public finance at the national and at the local levels is the potential for mobility among jurisdictions by the transport of final products and inputs, and especially by residents who finance local government and consume public outpu ...
... However, the principal difference between the economic analysis of public finance at the national and at the local levels is the potential for mobility among jurisdictions by the transport of final products and inputs, and especially by residents who finance local government and consume public outpu ...
Exam Review 2 Answer key
... 20. Now the other option is to issue 20 permits to each company that they can sell amongst each other. Company B uses 15 permits and sells the other 5 to company A for $40 each. How much does it cost the companies to reduce pollution? a. $250 b. $500 c. $375 d. $750 21. Which is more efficient? ...
... 20. Now the other option is to issue 20 permits to each company that they can sell amongst each other. Company B uses 15 permits and sells the other 5 to company A for $40 each. How much does it cost the companies to reduce pollution? a. $250 b. $500 c. $375 d. $750 21. Which is more efficient? ...
PowerPoint Presentation - EXTERNALITIES
... Salvaged water rule - If a person is able to save water (I.e. by better irrigation system), he cannot sell the extra water or even keep his right to it. Beneficial use - People may not establish water rights unless they are using the water for “beneficial use”. (I.e.) Agriculture is recognized in al ...
... Salvaged water rule - If a person is able to save water (I.e. by better irrigation system), he cannot sell the extra water or even keep his right to it. Beneficial use - People may not establish water rights unless they are using the water for “beneficial use”. (I.e.) Agriculture is recognized in al ...
Tax Incidence
... We call 50 + 50 ∗ 0.08 = 54 as the market price. This is different from what we see in the market. In stores, they only mark the price as ”what they receive”, but when you actually purchase the good, you are paying the marked price plus the tax. In our example, consumers are paying 54, while produce ...
... We call 50 + 50 ∗ 0.08 = 54 as the market price. This is different from what we see in the market. In stores, they only mark the price as ”what they receive”, but when you actually purchase the good, you are paying the marked price plus the tax. In our example, consumers are paying 54, while produce ...
Fall 2009 Final KEY
... of the supply disruption on the global market price, (ii) the short-run profit-maximizing output level of the U.S. firm, and (iii) the short-run profit level of the U.S. firm. Initial profit in the long run equilibrium is zero. After the supply disruption, market supply shifts back from S0 to S1, ra ...
... of the supply disruption on the global market price, (ii) the short-run profit-maximizing output level of the U.S. firm, and (iii) the short-run profit level of the U.S. firm. Initial profit in the long run equilibrium is zero. After the supply disruption, market supply shifts back from S0 to S1, ra ...
Pigovian tax
A Pigovian tax (also spelled Pigouvian tax) is a tax applied to a market activity that is generating negative externalities (costs for someone other than the person on whom the tax is imposed). The tax is intended to correct an inefficient market outcome, and does so by being set equal to the social cost of the negative externalities. In the presence of negative externalities, the social cost of a market activity is not covered by the private cost of the activity. In such a case, the market outcome is not efficient and may lead to over-consumption of the product. An often-cited example of such an externality is environmental pollution.In the presence of positive externalities, i.e., public benefits from a market activity, those who receive the benefit do not pay for it and the market may under-supply the product. Similar logic suggests the creation of a Pigovian subsidy to make the users pay for the extra benefit and spur more production. An example sometimes cited is a subsidy for provision of flu vaccine.Pigovian taxes are named after economist Arthur Pigou who also developed the concept of economic externalities. William Baumol was instrumental in framing Pigou's work in modern economics.