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1. Suppose that the government taxed consumption.To be specific, suppose we have a two-period model. An individual earns labor income Y0 =$100k at time zero, and earns no labor income at time 1. The individual may consume or save that income. Savings grow at rate r=.03. For every dollar of consumption, the individual pays the tax rate τ=.30 to the government.a. Graph the two-period budget constraint for consumption. What is the slope? Is this tax distortionary?b. The government modifies the consumption tax somewhat so that the first $20k of consumption in each period is tax free. Now graph the budget constraint.2. Claim: "The Mortgage Interest Tax Deduction is a regressive policy. A simpler, better policy that could achieve the same goals would be a home ownership tax credit that applies equally to all homeowners regardless of income or the value of the home." In a mini-essay (300 words) state whether you agree or disagree with that claim and explain your reasoning.3. A corporation produces output with a market price of $200 per unit. The marginal product of capital is 1/(2K), where K is units of capital, with each unit assumed to cost $1. (So when we talk about capital in this problem, units and $ value are equivalent.) The life span of the capital is 5 years, implying the straight line depreciation rate δ=.2. The financing cost of capital is ρ=.05.a. If depreciation and financing costs are not included in accounting costs, what is the optimal level of capital for the firm?b. If the corporate tax is 35%, what is the optimal level of capital?c. If depreciation at a rate δ=.2 is included in accounting costs, what is the optimal level of capital? [Hint: remember to calculate the present value of the deduction. Use .05 for the discount rate.]d. For c., what is the effective corporate tax rate?e. The firm is going to borrow the money for its capital purchases. The interest paid on the debt can be added to accounting costs. Suppose it turns out that the present value of this expense is .10 for every dollar of capital purchased. What is the optimal level of capital now?f. For e., what is the effective corporate tax rate?
Suppose that Portugal and Austria both produce rye and cheese. Portugal's opportunity cost of producing a pound of cheese is 5 bushels of rye while Austria's opportunity cost of producing a pound of cheese is 10 bushels of rye.
suggest new target market segment for product and its accompanying pricing strategy for instance bundling and
write a 750-word essay on how the environmental protection agencys policies impact business in the united states.use
Federal antitrust enforcers are investigating whether a multinational pharmaceutical company has attempted to minimize the impact of generic competition to one of its most profitable prescription drugs.
The pharmaceutical industry often has the luxury of implementing pricing strategies that appear high to consumers. Take a position on the fairness of the industry's approach to pricing pharmaceutical products including offering an alternative stra..
Use assembler directives to describe a table of all uppercase letters. Place this table in program memory starting from location 0x2000. Assign one byte to one letter. Use assembler directives to assign the symbols sum, lp_cnt, height, and weight to ..
In 2008 the Fed initiated a program called QE or quantitative easing to try and stimulate the economy. Using a fully labeled aggregate demand and supply graph, show what the objective of this program was. Explain what the new equilibrium point mea..
breakaway tours inc. has estimated the following multiplicative demand function for packaged holiday tours in the
the client currently is 46 years old with an income of about 126000 per year. his goal is to retire between ages 62 and
question 1. define any key terms that you feel are important in answering the following question as they are defined in
Suppose households become more frugal so that there is a downward shift in the consumption function (decrease in autonomous consumption). Analyze the effects of this change in household behavior on real output, unemployment.
1. Consider a one-year discount bond that pays $2,000 one year from now. If the rate of discount is 3 percent, calculate the present value of the bond.
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