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.
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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.
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- Clarify with the help of elasticity analysis how the tax incidence theory helps to trace the final burden distribution of a tax.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?Minnesota and Tennessee, among other states, have recently begun to tax the sales of healthcare providers, such as hospitals and physicians. Analyze the incidence of this sales tax for three different scenarios: (a) The demand for medical services is completely inelastic while the supply curve is positively sloped to the right. (b) The demand curve is downward sloping and supply is completely inelastic (for this case, it is best to shift the demand curve downward by the amount of the per-unit tax). (c) The demand curve is downward sloping and the supply curve is positively sloped. (d) When does the consumer or health care provider pay a larger portion of the tax? (e) Why?
- The division of a tax burden between Consumers and Producers is known as Tax IncidenceProducers bear the majority of a tax burden in which of the following circumstances?The deadweight loss due to the imposition of an excise tax is lowest when Group of answer choices 1. demand is relatively inelastic and supply is relatively elastic. 2. demand is relatively inelastic and supply is relatively inelastic. 3. demand is relatively elastic and supply is relatively elastic. 4. demand is relatively elastic and supply is relatively inelastic.The demand and supply functions of a good are respectively P = 600 – q P= 200 + 1/3 q where P is the price per unit and q is the quantity. a. Calculate the equilibrium price and quantity. b. The government decides to impose a tax, t, per unit.Write the supply function after taxation. c. Find the tax (t) per unit that will maximize the total tax revenue (T) on the assumption that equilibrium conditions prevail in the market. Use the second derivative test to verify it. d. Calculate the maximum amount of the total tax revenue (T).
- Answer the given question with a proper explanation and step-by-step solution. Using your answers from the previous table, calculate the tax burden that falls on buyers and on sellers, respectively, and calculate the price elasticity of demand and supply over the relevant ranges using the midpoint method. Enter your results in the following table.There are many possible ways to limit the number of cabs in a city. The most common method is an explicit quota using a medallion that is kept forever and can be resold. One alternative is to charge a high license fee each year, which is equivalent to the city’s issuing a medallion or license that lasts only a year. A third option is to charge a daily tax on taxicabs. Using figures, compare and contrast the equilibrium under each of these approaches. Discuss who wins and who loses from each plan, considering consumers, drivers, the city, and (if relevant) medallion owners.. Calculating tax incidence Suppose that the local government of Ogden decides to institute a tax on seltzer consumers. Before the tax, 20 billion packs of seltzer were sold every year at a price of $9 per pack. After the tax, 13 billion packs of seltzer are sold every year; consumers pay $12 per pack (including the tax), and producers receive $6 per pack. The amount of the tax on a pack of seltzer is $ burden that falls on producers is $ True per pack. True or False: The effect of the tax on the quantity sold would have been the same as if the tax had been levied on producers. False per pack. Of this amount, the burden that falls on consumers is $. per pack, and the
- By using only one graph, show and explain who bears the burden and excess burden of an excise tax(specific tax) in a market assuming that supply and demand curve have the same elasticity by usingpartial equilibrium analysis thanksSuppose that the government decides to give a subsidy s to a firm that hires a new worker, which reduces the cost of posting a vacancy (k) by s, where 0 < s < k. Write down the supply and demand functions, wage, and total surplus in a new equilibrium, respectively. What are the equilibrium effects of this in the DMP model? (Determine how j, Q, u, v, Y , w, and total surplus change in an equilibrium.) Use diagrams.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.