Econ 101 Exam Review 2 Answers
... 1. What will happen to the equilibrium price and quantity of pizza if a hamburger place opens next door and the price of dough decreases? A. Price will fall and the effect on quantity is ambiguous. B. Price will rise and the effect on quantity is ambiguous C. Quantity will fall and the effect on pri ...
... 1. What will happen to the equilibrium price and quantity of pizza if a hamburger place opens next door and the price of dough decreases? A. Price will fall and the effect on quantity is ambiguous. B. Price will rise and the effect on quantity is ambiguous C. Quantity will fall and the effect on pri ...
AS/ECON 4070 3.0AF Answers to Midterm Exam October 2005 Q1
... industry is likely to fall mostly on labour (in general). Q3. If a person’s preferences could be represented by the utility function ...
... industry is likely to fall mostly on labour (in general). Q3. If a person’s preferences could be represented by the utility function ...
Practice problems on Chapter 8
... a. sellers always bear the full burden of the tax. b. buyers always bear the full burden of the tax. c. buyers and sellers will share the burden of the tax. d. None of the above is correct; the incidence of the tax does depend on whether the buyers or the sellers are required to pay the tax. 4. The ...
... a. sellers always bear the full burden of the tax. b. buyers always bear the full burden of the tax. c. buyers and sellers will share the burden of the tax. d. None of the above is correct; the incidence of the tax does depend on whether the buyers or the sellers are required to pay the tax. 4. The ...
SYLLABUS OF THE COURSE Course name: Public Economics
... pd = 20 – q, which represents the marginal benefit curve where q is the quantity consumed when consumers pay price pd. The inverse supply curve for refining is MPC = 2+ q, which represents the marginal private cost curve when industry produces q units. The marginal external cost curve is MEC = 0,5q, ...
... pd = 20 – q, which represents the marginal benefit curve where q is the quantity consumed when consumers pay price pd. The inverse supply curve for refining is MPC = 2+ q, which represents the marginal private cost curve when industry produces q units. The marginal external cost curve is MEC = 0,5q, ...
Chapter Eight
... • You should always ask: What does policy success require and what does reality look like? Copyright © 2004 South-Western/Thomson Learning ...
... • You should always ask: What does policy success require and what does reality look like? Copyright © 2004 South-Western/Thomson Learning ...
200551318148152
... Although in general the goal of tax design is to minimize distortions in people’s decision, taxes can also be used to deliberately alter decisions because of the positive and negative externalities. But the revenue loss is greater than the increase in consumer surplus. Figure8-9 illustrates it. ⑩Sho ...
... Although in general the goal of tax design is to minimize distortions in people’s decision, taxes can also be used to deliberately alter decisions because of the positive and negative externalities. But the revenue loss is greater than the increase in consumer surplus. Figure8-9 illustrates it. ⑩Sho ...
Lecture 32
... The workers now get a wage of 5.65 which is more than the previous wage of 5.15. However they must pay a tax of 1 unit/hr. Their net wage is 4.65, lower than 5.15 by 0.5 units/hr. The firms were earlier paying a wage of 5.15 but now have to pay ...
... The workers now get a wage of 5.65 which is more than the previous wage of 5.15. However they must pay a tax of 1 unit/hr. Their net wage is 4.65, lower than 5.15 by 0.5 units/hr. The firms were earlier paying a wage of 5.15 but now have to pay ...
Module 50, Efficiency and Deadweight Loss
... • Gains are represented by Consumer and Producer Surplus, or Total Surplus ...
... • Gains are represented by Consumer and Producer Surplus, or Total Surplus ...
Module 50 - Efficiency and Deadweight Loss
... • Gains are represented by Consumer and Producer Surplus, or Total Surplus ...
... • Gains are represented by Consumer and Producer Surplus, or Total Surplus ...
Chapter 5 – Understanding Supply
... Excise tax – A tax on the production or sale of a good, in addition to the regular sales tax. An excise tax increases production costs by adding an extra cost for each unit sold. Excise tax are sometimes used to discourage the sale of goods that the government thinks are harmful to the public good, ...
... Excise tax – A tax on the production or sale of a good, in addition to the regular sales tax. An excise tax increases production costs by adding an extra cost for each unit sold. Excise tax are sometimes used to discourage the sale of goods that the government thinks are harmful to the public good, ...
Chapter 8 Questions
... would still have a consumer surplus even if he had to take all of the tax. If the tax was placed on Robert the transaction would no longer take place since the total cost is above his willingness to pay with the distribution of the tax ...
... would still have a consumer surplus even if he had to take all of the tax. If the tax was placed on Robert the transaction would no longer take place since the total cost is above his willingness to pay with the distribution of the tax ...
lec21bw - People.vcu.edu
... Society wants Bob to internalize the external costs of his smoking. One way to do that is to tax cigarettes. The amount of the tax per cigarette should equal the costs to others from Bob’s ...
... Society wants Bob to internalize the external costs of his smoking. One way to do that is to tax cigarettes. The amount of the tax per cigarette should equal the costs to others from Bob’s ...
Document
... 2. The rate at which the desire for good is satisfied as consumption increases 3. The level of income of consumer. ...
... 2. The rate at which the desire for good is satisfied as consumption increases 3. The level of income of consumer. ...
Carbon Taxes Vs tradable Permits - Victoria University of Wellington
... Tax Vs Tradable Permit: Perfect Knowledge • Distributional effects (of effectively an additional and new indirect tax) – Government gains area ‘h + i’ – Distribution between producers and consumers depends on relative demand and supply elasticities • Supply perfectly elastic: all passed on to consu ...
... Tax Vs Tradable Permit: Perfect Knowledge • Distributional effects (of effectively an additional and new indirect tax) – Government gains area ‘h + i’ – Distribution between producers and consumers depends on relative demand and supply elasticities • Supply perfectly elastic: all passed on to consu ...
Who is economically hurt when the following person is taxed…
... on items that only the rich could afford. The goal of this tax is to raise revenue from those who could easily afford to pay • Answer this question: Does the price incidence truly affect buyers more? • Write a short answer and provide a supply and demand curve to further explain your answer. ...
... on items that only the rich could afford. The goal of this tax is to raise revenue from those who could easily afford to pay • Answer this question: Does the price incidence truly affect buyers more? • Write a short answer and provide a supply and demand curve to further explain your answer. ...
A price ceiling
... 7. Mark, Kerry, Greg, and Carlos each like Chicago Cubs baseball games. The single-game ticket price for an infield box seat is $50. Mark values a ticket at $70, Kerry at $65, Greg at $60, and Carlos at $55. Suppose that if the government taxes tickets at $5 each, the selling price will rise to $55 ...
... 7. Mark, Kerry, Greg, and Carlos each like Chicago Cubs baseball games. The single-game ticket price for an infield box seat is $50. Mark values a ticket at $70, Kerry at $65, Greg at $60, and Carlos at $55. Suppose that if the government taxes tickets at $5 each, the selling price will rise to $55 ...
PUBF 303 Assignment 3
... What is the efficient public good provision level in the economy? 2. Suppose 10 people each have the demand Q = 20 − 4P for streetlights, and 5 people have the demand Q = 18 − 2P for streetlights.The cost of building each streetlight is 3. If it is impossible to purchase a fractional number of stree ...
... What is the efficient public good provision level in the economy? 2. Suppose 10 people each have the demand Q = 20 − 4P for streetlights, and 5 people have the demand Q = 18 − 2P for streetlights.The cost of building each streetlight is 3. If it is impossible to purchase a fractional number of stree ...
Ed Dolan, Soda Taxes, April 13, 2010
... If consumption of a good harms other people, it is said to have a negative externality , popularly called a “social cost.” If social cost were included along with private cost of production, the supply curve for the good would shift upward Many observers think consuming soda has a negative ext ...
... If consumption of a good harms other people, it is said to have a negative externality , popularly called a “social cost.” If social cost were included along with private cost of production, the supply curve for the good would shift upward Many observers think consuming soda has a negative ext ...
Price Controls - Gore High School
... Sales tax will affect supply as the tax effectively increases the producers costs of production. Therefore producers are willing to supply less which will cause supply curve to shift UP (vertically) to reach this new price Example – Government places a $4 tax on Cigarettes ...
... Sales tax will affect supply as the tax effectively increases the producers costs of production. Therefore producers are willing to supply less which will cause supply curve to shift UP (vertically) to reach this new price Example – Government places a $4 tax on Cigarettes ...
Problem Set 2 (Ch 4,5,6) 1. (4.12 in book). Let the supply curve be P
... so Q=8. In that case, using either demand or supply, P=8 too. The producer surplus is .5(8-0)(8)=32 and the consumer surplus is .5 (24-8)(8) = 64. Total surplus is 96. Next, figure out what happens if a tax of 3 is imposed on buyers. The demand curve will shift in, towards zero– with the tax, they’r ...
... so Q=8. In that case, using either demand or supply, P=8 too. The producer surplus is .5(8-0)(8)=32 and the consumer surplus is .5 (24-8)(8) = 64. Total surplus is 96. Next, figure out what happens if a tax of 3 is imposed on buyers. The demand curve will shift in, towards zero– with the tax, they’r ...
Name: ______ Student No.: ______ Quiz #2 Microeconomics
... C. capital equipment is doubled. D. specialization improves. ...
... C. capital equipment is doubled. D. specialization improves. ...
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.