Calculate tax equilibrium quantity, Macroeconomics

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?

Posted Date: 3/14/2013 1:20:27 AM | Location : United States







Related Discussions:- Calculate tax equilibrium quantity, Assignment Help, Ask Question on Calculate tax equilibrium quantity, Get Answer, Expert's Help, Calculate tax equilibrium quantity Discussions

Write discussion on Calculate tax equilibrium quantity
Your posts are moderated
Related Questions
Explain, using the best framework you can think of (based on our class discussion), the effect of a large federal deficit on interest rates.

Suppose the price elasticity of demand for used cars is estimated to be 3 what does this mean?

Q. Characteristics of endogenous growth theory? There are many different explanations for technological progress. Most of them, though, have many common characteristics:

Why a perfectly competitive retail market is more competitive than a monopoly


discuss mec

Pucker Lemonade, Inc., is a small company that produces bottled lemonade. Pucker's fixed cost includes the monthly rental cost of the lemon-smashing machines, the bottling machines

Trade barriers come in a lot of forms. Quota is one. This is when a country sets a limit to the imported products. This is completed for a number of reasons. One is due to the gove

Robert's New Way Vacuum Cleaner Company is a newly started small business that produces vacuum cleaners and belongs to a monopolistically competitive market. Its demand curve for t

Overnight target rates and inflation One of the main targets of every central bank is a low and stable inflation. It's main control variable is the overnight interest rate targ