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
Financial Development A well developed financial system is very essential for the smooth functioning of any economy. One set of important statistical indicators that is used to

A, Explain how a person can be free to choose but his or her choices are casually determined by past event 2 B , Draw the casual tree for newcomb''s problem when Eve can''t perfe

If the Banking system has $500,000 in demand deposit liabilities, $125,000 in total reserves and a reserve requirement of 15%: What is the maximum amount by which the money supply

Give an example of how the Principle of Opportunity Cost applies to your life. Think of a recent decision you made. It could be a decision as simple as whether to eat out or cook y

Between 2007 and 2009 the U.S. economy experienced a severe recession. In an effort to stimulate the economy, the federal government passed a stimulus package. Explain the federal

What are prices indexes designed to measure? Outline how they are constructed. When GDP and other income figures are compared across time periods, explain why it is important to ad

The LM curve  The LM curve shows all combinations of R and Y, where the money market is in equilibrium. The LM-curve slopes upwards. Mone

Describe in detail about Exchange rate systems Various countries have different exchange rate systems. The most significant characteristic of an exchange rate system is to what

What is the development process? Development is measured through outcomes that are development occurs while key indicators of human well-being enhance. A reduction of poverty

reason why the change in equilibrium of output is greater than the change in initial invest ..