Search & Filtering
The incidence of a tax any economic agent in a competitive market depends largely upon the elasticity of supply and demand of the factor. So graphically show these impacts and the burden shared by buyer and seller of the factor if an amount of $X is imposed. Draw all possible situation while ringing change in the Supply curve. Also graphically indicated what will be the net burden of tax if the tax is imposed either on consumer side or on the producer side. Make a parallel comparison.
Consider an economy that is characterized by the following equations:
C = 150 + 0.65(Y - T) - 200r
T = 100 + 0.2Y I = 200 - 200r
G = 500
X = 100
IM = 150 + 0.1(Y - T) - 100r
L = - 25 + 0.5Y - 500r
M = 133, 200
P ^ (SR) = 120
(Consumption)
(Taxation)
(Investment Demand)
(Government Expenditure)
(Exports)
(Imports)
(Money Demand) (Money Supply)
(Short-Run Price Level)
Answer each of the following questions. In your answers, be sure to state any assumptions that you impose and provide an explanation.
Derive the AD and SRAS curves.
Solve for the short-run equilibrium in the AD-SRAS model. Is your solution the same as in part 3 above? Why or why not?
Is the fiscal multiplier in this economy larger or smaller than if the asset market were not accounted for in the model? Briefly explain.
True or false? The aggregate demand curve is downward-sloping because the demand for goods and services increases as the price decreases. Briefly explain.
suppose that the demand and total cost function of a monoplist are P=24-3Q and C=Q²+8Q respectively, finde the optimum quality ,price and profit on these levels.
Combine Harvestor Company, one of the main large scale farm machinery in the world, has hired you as an expert to advise them on the pricing policy for their Combine harvesters. One of the things the company would like to know is how much a 10 percent increase in price is likely to reduce their sales. What would you need to know to help the company with this problem? Explain why the facts are important.
- The elasticity of demand for home computers is -2.5, the elasticity of demand for business computers is -.90, and the elasticity of supply for computers for both purposes is 1.
- A per-unit tax of $200 is imposed on the suppliers of computers. How much does the gross price increase in each market? [Hint: first find the tax incidence/shares.]
Why are clothes with designer labels more expensive than own brand clothes from a chain store even though they may cost a similar amount to produce?
Explain each of the following statements using supply-and-demand diagrams.
a) “When a cold snap hits Florida, the price of orange juice rises in supermarkets throughout the country.”
b) “When the weather turns warm in New England every summer, the price of hotel rooms in Caribbean resorts plummets.”
c) “A strike by steelworkers raises steel prices.”
d) “The price of station wagons rises.”
explain income effect,substitution effect and prise effect with the help of indifference curve
The price of coffee rose sharply last month, while the quantity sold remained the same. Five people suggest various explanations: Leonard: Demand increased, but supply was perfectly inelastic. Sheldon: Demand increased, but it was perfectly inelastic. Penny: Demand increased, but supply decreased at the same time. Howard: Supply decreased, but demand was unit elastic. Raj: Supply decreased, but demand was perfectly inelastic. Who could possibly be right? Use graphs to explain your answer.
Boston chicago
Pairs of Red socks per Worker per Hour
3 2
Pairs of White socks per Worker per Hour
3 1
a. Without trade, what is the price of white socks (in terms of red socks) in Boston? What is the price in Chicago?
b. Which city has an absolute advantage in the production of each color sock? Which city has a comparative advantage in the production of each color sock?
c. If the cities trade with each other, which color sock will each export?
d. What is the range of prices at which mutually beneficial trade can occur?
