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
Consumer Equilibrium: According to our assumption for 'x' units consumption of the commodity, gross utility obtained by the consumer is U(x).But for this, the consumer must sp

When Sonoma Vineyards reduces the price of its Cabernet Sauvignon from $15 a bottle to $12 a bottle, the result is an increase in a. the demand for this wine b. the supply of

What are the international economic crisis A current account surplus can only take place in one nation if there is a current account shortage in another country. So it makes no

7 people have jobs, 3 want to work but are not, and there are 20 adults. What is the participation rate?

Explain demand management of Keynesian economists The demand management of Keynesian economists of 50's and 60's is attacked by free-marketers for ignoring the importance of s

You have a choice between a lottery lump sum payout of $10,000,000 today or a series of 25 annual annunity payments the first payment will be one year from today ad a discount rate

discuss the contention that the existance of a labour market in a perfect competion is a fallacy

Indicate whether each of the following statements is true, false, or uncertain, and explain your answer.  Your grade will depend primarily on the quality of your explanation.

The number of gallons of paint that Home Depot sells in a given day is normally distributed with a mean of 150 gallons and a standard deviation of 35 gallons (I realize that the di