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Shifting a Tax on Home Heating Oil. You are an economic consultant to a member of Congress. Someone just introduced a bill that would impose a carbon tax of $100 per ton, which would shift the supply curve for heating oil upward by $0.30 per gallon and to the left by 15 percent. The initial (pretax) price of heating oil is $2.00.
a. Use a graph to show the effects of the tax on the price and quantity of heating oil. Will the entire tax be paid by consumers? If not, who else will bear part of the tax?
b. Suppose the price elasticity of the supply of heating oil is 1.0 and the price elasticity of demand is 0.50. Use the price-change formula developed in the chapter on elasticity to predict the new equilibrium price. What fraction of the tax is passed forward to consumers?
Thomas has found a savings fund that pays interest of 2.62 percent compounded semiannually. He will make monthly deposits of $395 and he can make a deposit only once a month on the agreed payment date. Find the number of deposits Thomas must make.
Suppose the firm increases its wage to $47. What is the average productivity of its workforce? On average, what is the firm s profit per worker?
An economy has 2,000 people. 1,000 of them have utility functions U(x, y) = x + y and 1,000 of them have utility functions U(x, y) = min{ 2x, y}. Everybody has an initial allocation of 1 unit of x and 1 unit of y. Find the competitive equilibrium ..
A bank recently announced an "instant cash" plan for holders ofits bank credit cards. A cardholder may receive cash from thebank up to a preset limit (about $500). There is a specialcharge of 4% made at the time the "instant cash" is sent
we want to understand the determinant factors that explain students performance in fifth-grade tests. we observe a
Suppose the world population today is 7 billion, and suppose this population grows at a constant rate of 3% per year from now on. (This rate is almost certainly much faster than the future population growth rate)
Suppose Springfield's economy moves into a recession and Y falls to $9 and rising unemployment allows widget makers to reduce wages to $18 per hour. What happens to the supply and demand curves.
Explain the multiplier intuitively. Why is it that an increase in planned investment of $100 raises equilibrium output by more than $100 Why is the effect on equilibrium output finite How do we know that the multiplier is 1/MPS
Review The Shell Report and summarize potential stakeholders that could be interested in this report. For each potential stakeholder formulate a financial or non-financial performance indicator.
What distinguishes the golden rule rate of capital accumulation from other steady-state rates of capital accumulation Is the rate at which capital is being accumulated in this economy consistent with the golden rule
Suppose a firm compensates its CEO according to I = 250,000 + 0.0317 X + 0.01 Y, where I = total compensation of the CEO, X = company profits (in millions), and Y = Sales (in millions). Assume that X = $10 (millions), and Y = $20 (millions).
Market research indicates that you can sell 40 000 tickets for the Sundowns-Pirates clash atR10 each, or 30 000 tickets at R20 each. Which option would you choose? What is the priceelasticity of the demand for tickets for this particular game?
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