Explain the excess burden of the subsidy

Assignment Help Finance Basics
Reference no: EM13709385

Question 1:

A cost-benefit analysis of a new Irrigation project Indicates that the net benefits = Benefit - Cost (B-C) of the project in each year wilt be $20 million. This project will yield benefits for 10 years. Calculate the present value of benefits minus costs when the social rate of discount is 10%. Dees the program merit approval? How would the present value of the net benefits change if the social rate of discount were 16%?

You can use spreadsheet software, such as MS Excel, to do the calculation. After that, copy and paste it into a MS Word document, write your answer in the MS Word document, and upload it to Blackboard.

Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response.

All sources used, must he referenced; paraphrased and quoted material must have accompanvine citations.

Question 2:

Suppose broad is subsidized In a small Caribbean nation with a high percentage of citizens who live in poverty. The subsidy is paid to suppliers of bread by the government in the amount of 50 pesos per loaf. In the absence of the subsidy, the price of bread would be 100 pesos per loaf. Assuming that the supply of broad is perfectly elastic at the 100 peso price, what is the effect of the subsidy on the market equilibrium price 01 bread? Draw a graph, and explain the excess burden of the subsidy. Assuming no externalities, why will subsidy result in more than the efficient amount of bread being produced?

 

Reference no: EM13709385

Questions Cloud

Explain the freezing point depression constant of h2o : Problem- What is the freezing point of 0.100 M NaNO3(aq)? The freezing point depression constant of H2O is 1.86o C/m A. 0.186 oC B. -0.186oC C. 0.372 oC D. -0.372oC E. 18.6oC
Define the activation energy of a certain reaction : Problem- Given that the initial rate constant is 0.0150s-1 at an initial temperature of 28 degrees C , what would the rate constant be at a temperature of 200 degree C for the same reaction described in Part A
Brief description of dram chips : Meena Charvan Corp's computer chip production process yields. DRAM chips with an average life of 1,800 hours and s=100 hours. The tolerance upper and lower specification limits are 2,400 hours and 1,600 hours, respectively.
Explain what is the percent yield for the reaction : Problem- Sodium metal reacts with diatomic chlorine gas to form sodium chloride. What is the percent yield for the reaction when 3.7 g sodium metal reacts with 4.3 g chlorine gas to produce 5.5 g of sodium chloride
Explain the excess burden of the subsidy : Calculate the present value of benefits minus costs when the social rate of discount is 10%. Dees the program merit approval? How would the present value of the net benefits change if the social rate of discount were 16%?
Explain compounds by standard molar entropy : Problem- Without referring to a data table ranks the following compounds by standard molar entropy: (from highest S to lowest S)
Explain the correct balanced equation : Problem- The following balanced equation is incorrect. Explain why this is and give the correct balanced equation Al (s) + 3 Br(l) --> AlBr3(s)
How do we use the concept of oxidation numbers : Problem- How do we use the concept of oxidation numbers to determine whether a redox reaction takes place or not? Give one appropriate example to support your explanation.
Define baso4 is to be formed in a metathesis reaction : Problem- If a precipitate of BaSO4 is to be formed in a metathesis reaction, aqueous solutions of which two ionic compounds can be combined?

Reviews

Write a Review

 

Finance Basics Questions & Answers

  State the terminology used to identify the fra in which the

a corporate treasurer needs to hedge the risk of the interest rate on a future transaction. the risk is associated

  Calculate the expected operating cash flow

Her tax rate is 35%. Calculate the expected Operating Cash Flow [OCF] for the first year.

  Estimate the required rate of return

Ki is the required rate of return that we are solving for ; Rf is the risk-free rate; and we shall assume it is 4.6 percent; bi is the systematic risk of a stock that we will estimate;

  Determine the best alternative

Suppose your uncle has given you three options for your inheritance. You can have $10,000 now; $2,000 per year for the next eight years; or $24,000 at the end of 8-years.

  Calculate the principal paid to the bank in month

You have borrowed $130,000 to buy a new motor home. Your loan is to be repaid over 15 years at 8% compounded monthly Calculate the principal paid to the bank in month 2 of the loan.

  What is the bonds coupon rate

Buttercup Inc. just issued RM1,000 par 30-year bonds. Each bond was sold for RM1,107.20 and pay interest semiannually. Investors require a rate of 7.75% on the bonds. What is the bonds' coupon rate?

  Roles played by financial markets and institutions

Illustrate the functions and roles played by financial markets and institutions, particularly as they relate to the flow of funds from lenders to borrowers within the global financial system

  How large is the face value of the loan

Your bank has agreed to grant you a discount loan with an APR of 5.25%. If you need $5,000 today, how large is the face value of the loan?

  What is the firms horizon or terminal, value

Hart Enterprises recently paid a dividend, Do, of $1.25. It expects to have nonconstant growth of 20% for 2 years followed by a constant rate of 5% thereafter. The firm's required return is 10%.

  Future value of a single amount if you deposit 2000 in a

1. future value of a single amount if you deposit 2000 in a 5-year certificate of deposit at 5.2 how much will it be

  What was the real return on the stock

What was the real return on the stock? If an investor sold the stock after one year and paid taxes on the investment at a 15 percent tax rate, what is the real after tax return on the investment?

  Find the equilibrium price

The marginal benefit of a product A is p=-q+100. The marginal cost is defined by the expression p=1.5q. Find the equilibrium price, equilibrium quantity, the expected revenue under these assumptions, and consumer surplus.

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