Consider the following consumer problem's facing a proportional once tax. Utility function over consumption (C) and leisure (L) U(C,L)= 3 ln(C)+ 2 ln(L) Total hours : H=40 Labor hours :NS =H-L Proportional income tax rate = 0.2 Production function: Y =zND Total factor productivity : z =4 The representative consumer maximizes utility, the representative firm maximizes profit, and the government balances budget . What is the tax revenue at equilibrium.?

Consider the following consumer problem's facing a proportional once tax. Utility function over consumption (C) and leisure (L) U(C,L)= 3 ln(C)+ 2 ln(L) Total hours : H=40 Labor hours :NS =H-L Proportional income tax rate = 0.2 Production function: Y =zND Total factor productivity : z =4 The representative consumer maximizes utility, the representative firm maximizes profit, and the government balances budget . What is the tax revenue at equilibrium.?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.10P

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Willy the Worker has unavoidable personal commitments taking 8 hours per day. He can choose to work or to play (i.e., take leisure, a normal good) in the remaining hours. Being a graduate in Economics, he can charge $100 per hour for his consulting services when he chooses to work. The government's income tax system has a 0% tax rate for daily incomes from $0 to $ $600 per day; above $600 per day, the tax rate is 20%. Willy has a certain Utility Function U(L, I) where L = leisure playtime and I = Income. His Marginal Rate of Substitution is known to be derived from this equation: MRSL/I=2I/L. (Note that the "price" of Income is $1.) Willy thinks he pays enough taxes via the excise taxes on things he buys. So he decides to work the maximum number of hours he can without paying any income taxes. According to our Indifference Theory model, is Willy maximizing his satisfaction with his "no tax" choice, or should he work fewer hours?
The demand and supply functions in the market for Dentemprika yam are given as: Q =300-50P and 100=150P-Q respectively. a) present graphically the result of the above question b) Determine which economic agent has relatively higher welfare or surplus c) Given the elasticities of demand and supply at the equilibrium if the government imposes a per unit tax on the producer who will bear the larger share of the tax?
Consider the following consumer problem's facing a proportional income tax. Utility function over consumption (C) and leisure (L) U(C,L)= 3 ln(C)+ 2 ln(L) Total hours : H=40 Labor hours :NS =H-L Proportional income tax rate = 0.2 Production function: Y =zND Total factor productivity : z =4 The representative consumer maximizes utility, the representative firm maximizes profit, and the government balances budget . What is the tax revenue at equilibrium.?
All individuals have the same utility function over consumption, C, and leisure, L, given by U = C1/3L2/3, Denote the wage rate by w. The total time available for labour and leisure is equal to 12. The price of consumption is PC=1. Denote the amount of labour supplied as N. 1)Find the Labour supply function. 2)The government introduces a tax t=0.2 on wage, such that the after-tax wage is (1-t)w. How much tax revenue does the government collect on everyone? What is the effect on labour supply? 3)The government chooses instead to collect a fixed lump-sum T from everyone. What is the effect on labour supply?
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Suppose legislation is passed stating that a per unit tax of $.50 per gallon of gasoline must be paid by energy suppliers. Assuming demand for gasoline is more inelastic than supply of gasoline, then the economic burden of this tax? a. Will be equally experienced by energy suppliers and consumers. b. Gasoline prices will be disrupted by the tax and this disruption will harm consumers more than energy suppliers. c. Gasoline prices will be disrupted by the tax but this disruption will harm only energy suppliers since they are ordered by law to pay the tax. d. Gasoline prices will be disrupted by the tax and this disruption will harm suppliers more so than consumers.