1. Corn is an essential commodity in a small Central American country and the government intends to impose a tax on rich consumers in order to subsidize the consumption by the poor. The demands of these two groups are defined by P = 105 qr and P = 50- qp, respectively. The supply curve is infinitely elastic at P = 20. If the government wants to give a subsidy S = 10 for each unit sold to the poor, how much would the government have to spend? 100 400 300 600 None of the options
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- The small happy Kingdom of Pollyanna does not trade with the rest of the world, but uses U.S dollars for its currency. Its domestic price of tofu is $1 per pound and the Kingdom produces and consumes 5 tons of tofu. The world price of tofu is just $0.50 per pound. At this price, the Kingdom would produce only 2 tons of tofu and would consume 8 tons of tofu, and thus have to import 6 tons of tofu. Suppose the Kingdom decides to open up to trade, but imposes a tariff of 0.25/lb on all imports of tofu. How much money does the Kingdom collect from this tariff? (Note: 1 ton = 2000 lbs.)2. The Coldmarket government is considering several excise taxes on wool. They need to generate at least $1,150 in revenue to fund the construction of the fort, but they also wish to minimize the loss of surplus to consumers and producers. They are considering the following excise tax amounts: $1.50 $3.00 $4.50 $6.00Davao has a potential foreign customer that has offered to buy 1,500 tons atP450 per ton. Assume that all of Davao’s costs would be at the same levels and rates as last year. What net income after taxes would Davao make if it took this order and rejected some business from regular customers so as not to exceed capacity?
- The current equilibrium price and quantity in the chewing gum market are $3 and 156,000 units, respectively. The government introduces a tax of $0.75 per unit which leads to the price that buyers pay to increase to $3.25 and the price that sellers receive to fall to $2.50, while the quantity traded drops to 150,000. 1) Calculate the tax incidence on buyers and sellers. Who bears the largest burden of the tax? 2 ) What is the revenue that the government collects from the tax? Show all your calculations either in the answer box below or on the file you will upload. If your calculations are on the uploaded file, your final answer should still be in the answer box below. Round your results to two decimal places if needed.Davao has a potential foreign customer that has offered to buy 1,500 tons at P450 per ton. Assume that all of Davao’s costs would be at the same levels and rates as last year. What net income after taxes would Davao make if it took this order and rejected some business from regular customers so as not to exceed capacity? If the sales volume is estimated to be 2,100 tons in the next year, and if the prices and costs stay at the same levels and amounts next year, the after-tax income that Davao can expect for next year is? Assume that Davao plans to market its product in a new territory. Davao estimates that an advertising and promotion program costing P61,500 annually would need to be undertaken for the next two or three years. In addition, a P25 per ton sales commission over and above the current commission to the sales force in the new territory would be required. How many tons would have to be sold in the new territory to maintain Davao’s current after-tax income of P94,500?Suppose you have been hired by President Emmanuel Macron of France as an economic policy consultant. In order to finance an increase in unemployment benefits, the French government needs to raise €10 billion in additional tax revenue. President Macron is considering two policies to achieve this goal: a new tax on gasoline or a new tax on bequests (money left to your children or other heirs). Which of these two policies would be the most economically efficient? Why? Explain why the policy you recommended in a.) might be politically unpopular. Dismayed by your assessment, President Macron proposes a third alternative: a broad decrease in current taxes. Explain why this could increase tax revenue for the French government, but it is unlikely to work in practice.
- Davao has a potential foreign customer that has offered to buy 1,500 tons at P450 per ton. Assume that all of Davao’s costs would be at the same levels and rates as last year. What net income after taxes would Davao make if it took this order and rejected some business from regular customers so as not to exceed capacity? Without prejudice to your answers to previous questions, and assume that Davao plans to market its product in a new territory. Davao estimates that an advertising and promotion program costing P61,500 annually would need to be undertaken for the next two or three years. In addition, a P25 per ton sales commission over and above the current commission to the sales force in the new territory would be required. How many tons would have to be sold in the new territory to maintain Davao’s current after-tax income of P94,500? If the sales volume is estimated to be 2,100 tons in the next year, and if the prices and costs stay at the same levels and amounts next year, the…Imagine the country is made up of 100 households. The federal government needs to collect $800,000 in income taxes to be able to function. The population consists of 6 groups: Group A: 20 households that earn $12,000 each Group B: 20 households that earn $29,000 each Group C: 20 households that earn $50,000 each Group D: 20 households that earn $79,000 each Group E: 15 households that earn $129,000 each Group F: 5 households that earn $295,000 each This scenario is roughly proportional to the actual United States population and tax needs. We are going to determine new income tax rates. The first proposal we’ll consider is a flat tax – one where every income group is taxed at the same percentage tax rate. 1) Determine the total income for the population (all 100 people together) 2) Determine what flat tax rate would be necessary to collect enough money. The second proposal we’ll consider is a modified flat-tax plan, where everyone only pays taxes on any income over $20,000. So, everyone…An energy firm is betting on wind power's long-term viability in Texas and plans to erect what would be one of the biggest wind farms in the world with 200 wind turbines costing some $1.69 million each. Energy companies investing in wind power are also expecting governments to toughen rules relating to traditional energy sources, as part of long-term efforts to reduce global-warming emissions. But generating power from wind is not profitable for companies without government tax breaks. The following financial and technical data have been compiled for furtherconsideration: • Number of wind turbines to be built: 200 units• Power capacity: 310,000 kW• Capital investment required: $338,000,000• Project life: 20 years• Salvage value of the wind turbines after 20 years: $0• Annual net cash flows {after all deductions): $41,391,160According to the data provided, answer the following questions:(a) What is the projected IRR on this investment?(b) If the company's MARR is known to be 10%, is the…
- Davao has a potential foreign customer that has offered to buy 1,500 tons at P450 per ton. Assume that all of Davao’s costs would be at the same levels and rates as last year. What net income after taxes would Davao make if it took this order and rejected some business from regular customers so as not to exceed capacity? Answer: 221,500 Without prejudice to your answers to previous questions, and assume that Davao plans to market its product in a new territory. Davao estimates that an advertising and promotion program costing P61,500 annually would need to be undertaken for the next two or three years. In addition, a P25 per ton sales commission over and above the current commission to the sales force in the new territory would be required. How many tons would have to be sold in the new territory to maintain Davao’s current after-tax income of P94,500? Answer: 307.5The entire poultry industry is working hard to keep up with demand, but egg production is falling behind. According to the USDA’s Economic Research Service, the price of eggs in the U.S. is expected to rise more than 35 percent in 2018. The cause of this egg price increases? An uptick in foreign demand for US eggs is partly to blame. When the avian influenza devastated Europe this past year, egg suppliers in the U.S. stepped in to help fill the demand in these countries. Another problem arose in late 2017 where some egg supplies were contaminated with a dangerous insecticide, affecting countries including Germany, France and Belgium. With millions of eggs being pulled from the shelves in Europe, US exports of eggs rose 663 percent between 2016 and 2017. Domestic demand has increased as well. In the United States, 2017 saw a 20-year record in egg consumption at 275.2 eggs per person per year. When you multiply that by 325 million Americans, that’s a lot of eggs. Now, consider the…The entire poultry industry is working hard to keep up with demand, but egg production is falling behind. According to the USDA’s Economic Research Service, the price of eggs in the U.S. is expected to rise more than 35 percent in 2018. The cause of this egg price increases? An uptick in foreign demand for US eggs is partly to blame. When the avian influenza devastated Europe this past year, egg suppliers in the U.S. stepped in to help fill the demand in these countries. Another problem arose in late 2017 where some egg supplies were contaminated with a dangerous insecticide, affecting countries including Germany, France and Belgium. With millions of eggs being pulled from the shelves in Europe, US exports of eggs rose 663 percent between 2016 and 2017. Domestic demand has increased as well. In the United States, 2017 saw a 20-year record in egg consumption at 275.2 eggs per person per year. When you multiply that by 325 million Americans, that’s a lot of eggs. Now, consider the…
