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Response to the Gas Tax. Petrov earns $10,000 in pretax income and initially pays $2,200 in income taxes and consumes 600 gallons of gasoline per year (at a price of $3 per gallon) and spends $6,000 on another good (at a price of $1 per unit). At the initial bundle of gas and the other good, the marginal utility of gas is 30 utils and the marginal utility of the other good is 10 utils.
a. Draw a complete graph showing Petrov s initial (before the gas tax) budget line and his initial choice. At his initial choice, the marginal utility per dollar on gasoline is utils.
b. Suppose the government imposes a new gasoline tax of $2 per gallon, and assume that the gas tax increases the price of gas to $5. To make his initial bundle of gasoline and other goods affordable after the $2 gas tax, Petrov s income tax must decrease by __________.
c. After the tax changes, at his initial bundle the bang per buck of gasoline is________ , compared to a bang per buck of for the other good.
Your firm has an opertunity to make an investment of $50,000. Its cost of capital is 12 percent. It expects after tax cash flow for the next 5 years to be the following: Yr1 - 10,000 Yr2 - 20,000 Yr3 - 30,000 Yr4 - 20,000 Yr5 - 5,000
From the Keynesians, Y = C I G NX can be transformed into a theoretical model. In particular, assume that the consumption C = A mpc (Y-T), where A is a constant, mpc is the marginal propensity to consume, Y is national income and T is income taxes..
Using a combined interest rate per interest period (d) for computing present worth values (PW). What is the present worth of the $1,000,000.00. if the formula for d is d = i + f + (i × f) and the inflation rate (f)=2.3% and the interest rate (i) i..
The supply curve for product X is given by QXS = -520 + 20PX . a. Find the inverse supply curve. P = + Q b. How much surplus do producers receive when Qx = 400? When Qx = 1,200
Suppose that David has $1000. In the beginning of a year he decided to put his money in a saving account with 5% interest rate per year. The CPI was 150 in the beginning of that year. He expected that the CPI would be 153 in the beginning of the n..
Assume that the price index is one hundred and a typical basket of goods and services cost $8. Within the basket, you had four hamburgers and 3 hot dogs.
assuming product price is $32. With $32 in place of $56, its costs us $52.50 and we sell it for $30. This does not produce in the short run. The loss-minimizing outcome would be a loss of $22.50. The economic loss would be if you take the loss of ..
Assume that a national restaurant firm called BBQ builds 20 new restaurants at a cost of $1 million per restaurant. It outfits each restaurant with an additional $300,000 of equipment and furnishings
Find the equation describing the LM curve. Note that since I did not give you a specic P (and the LM curve is always drawn given a specic P), you will end up with an equation in three unknowns (Y,P,r).
Use the given equation and determine the demand equation as a function of Ps if the price of other pastas (Po) is $2,
Graph these curves and illustrate the market demand curve.
Vaguely remembering his intoductory economics course, thechief Financial officer tells the CEO it is better to produce 1case of ball bearings , because marginal revenue equals marginalcost at the quantity . what are the firms's profit /losses at t..
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