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Indicate whether the statement is true or false, and justify your answer.
Pigouvian taxes always improve social welfare.
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- Indicate whether the statement is true or false, and justify your answer.Herd immunity is a negative health externality.If the government wants to use a Pigouvian tax to alleviate the problem of obesity contagion, what should it tax? What factors go into deciding the size of the tax?Indicate whether the statement is true or false, and justify your answer.Subsidies that provide financial incentive for people to become organ donors may lead to a decrease in donations.
- Indicate whether the statement is true or false, and justify your answer.Most countries effectively impose an infinite tax on organ sales.Indicate whether the statement is true or false, and justify your answer.Every antibiotic taken causes a net social loss by contributing to antibiotic resistance.The ‘Rawlsianism’ approach to social welfare improvement is based on a ‘Pareto improvement’ principle. Do you agree? Explain.
- Suppose the market for solar panels has the following demand and supply functions:QD =10-4P QS =2P Suppose additionally that the government gives a $1 subsidy to buyers per unit purchased. Compute the change in welfare for consumers, producers, and the dead weight loss. Who benefits most from the subsidy? Why?To minimize deadweight loss associated with taxation, policy makers should A.impose flat tax rates instead of progressive tax rates. B.impose taxes in markets with positive externalities. C.all of these D.impose taxes in markets with imperfect competition.Indicate whether the statement is true or false, and justify your answer.The phenomenon of herd immunity makes disease eradication difficult because it ensures that diseases will survive until vaccination rates reach 100%.
- Nation-wide welfare programs are more likely to be introduced in countries with the proportional electoral system than the majoritarian electoral system.True/ False provide supporting logic evidence.Present the Voluntary Exchange Model of Lindah and Bowen’s subsequent modification. Clarify with the help of elasticity analysis how the tax incidence theory helps to trace the final burden distribution of a tax.Suppose the market demand for milk is Qd = 40 – 4P Where Qd is millions of gallons demanded and P is price per gallon. Suppose the market supply for milk is Qs = - 40/3 + 20/3P As the tax rate doubles from $1 to $2 to $4, what happens to deadweight loss? a.Deadweight loss increases, but does not double with each increase. b.Deadweight loss exactly doubles. c.Deadweight loss more than doubles. d.Deadweight loss does not change.
