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Problem 5: The local government in Karachi is considering two tax proposals:
- A lump-sum tax of Rs. 300 on each producer of Ice-cream.
- A tax of Rs. 1 per unit of Ice-cream, paid by producers of Ice-cream.
- Which cost
curves ; average fixed cost, the average variable cost,average total cost , and marginal cost would shift as a result of the lump-sum tax? Why?
2. Which cost curves; average fixed cost, the average variable cost, average total cost, and marginal cost would shift as a result of the per-unit tax? Why?
3. Explain with Graphs.
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- The case of a tax over shifting (i.e., that the price after tax increases by more than the tax) A) is only possible in the case of perfect competition and a perfectly elastic demand curve. B) is only possible in the case of perfect competition and an inelastic demand curve. C) is only possible in the case of perfect competition and a vertical demand curve. D) is impossible with perfect competition, irrelevant of the elasticities In a two-period life cycle model, the intertemporal budget constraint has a kink if A) interest payments cannot be deducted but interest receipts are taxable. B) interest payments can be deducted but interest receipts are not taxable. C) all of the above. D) none of the above.part d is not answered productive inefficiency refers to the extra costs to produce a given amount relative to the lowest cost method of producing that amount. How much of this loss is due to productive inefficiency rather than market power?You are an assistant to a senator who chairs an ad hoc committee on reforming taxes on telecommunication services. Based on your research, AT&T has spent over $15 million on related paperwork and compliance costs. Moreover, depending on the locale, telecom taxes can amount to as much as 25 percent of a consumer’s phone bill. These high tax rates on telecom services have become quite controversial, due to the fact that the deregulation of the telecom industry has led to a highly competitive market. Your best estimates indicate that, based on current tax rates, the monthly market demand for telecommunication services is given by Qd = 250 − 5P and the market supply (including taxes) is QS = 4P − 110 (both in millions), where P is the monthly price of the telecommunication services.The senator is considering tax reform that would dramatically cut tax rates, leading to a supply function under the new tax policy of QS = 4.171P − 110. How much money per unit would a typical consumer save…
- You are an assistant to a senator who chairs an ad hoc committee on reforming taxes on telecommunication services. Based on your research, AT&T has spent over $15 million on related paperwork and compliance costs. Moreover, depending on the locale, telecom taxes can amount to as much as 25 percent of a consumer’s phone bill. These high tax rates on telecom services have become quite controversial, due to the fact that the deregulation of the telecom industry has led to a highly competitive market. Your best estimates indicate that, based on current tax rates, the monthly market demand for telecommunication services is given by Qd = 300 − 4P and the market supply (including taxes) is Qs = 3P − 120 (both in millions), where P is the monthly price of telecommunication services. The senator is considering tax reform that would dramatically cut tax rates, leading to a supply function under the new tax policy of Qs = 3.2P − 120. How much money per unit would a typical consumer save each…You are an assistant to a senator who chairs an ad hoc committee on reforming taxes on telecommunication services. Based on your research, AT&T has spent over $15 million on related paperwork and compliance costs. Moreover, depending on the locale, telecom taxes can amount to as much as 25 percent of a consumer’s phone bill. These high tax rates on telecom services have become quite controversial, due to the fact that the deregulation of the telecom industry has led to a highly competitive market. Your best estimates indicate that, based on current tax rates, the monthly market demand for telecommunication services is given by Qd = 300 - 4P and the market supply (including taxes) is QS = 3P - 120 (both in millions), where P is the monthly price of the telecommunication services.The senator is considering tax reform that would dramatically cut tax rates, leading to a supply function under the new tax policy of QS = 3.3P - 120. How much money per unit would a typical consumer save…Student tuition at ABC University is $500 per semester credit-hour. The state supplements school revenue by matching student tuition dollar for dollar. In other words, for each dollar a student pays in tuition, the state pays a dollar that is also considered revenue. Average class size for a typical three credit-hour course is 25 students. Labor costs are $3,000 per class, materials costs the school $25 per student per class and overhead costs are $15,000 per class. For this problem, ABC University measures output as the total amount of revenue generated. a) What is the multifactor productivity performance for a course at ABC University? b) If instructors work an average of 10 hours per week for 16 weeks for each three-credit hour class of 25 students, what is the labor-hours productivity ratio? c) Suppose next year, the tuition increases to $550 per semester credit hour but the state only pays $100 per semester hour instead of the matching it had previously paid. The instructors…
- Question 1--Calculate the cost of eliminating our wholesalers• Revenues are $230 million• We will have to pay 5% of revenues for transportation.• We will have to pay 10% of sales to cover inventory costs.• A warehouse costs $2.5 million a year to run and maintain. We need 12 warehouses tostock our inventory.What is the cost of vertical integration in revenue dollars?The difference between economic profit and accounting profit is equal to: zero implicit and explicit costs. implicit and explicit revenues. implicit revenues minus implicit costs.Which of the following describes accounting profits? Depreciation of fixed and variable assets Total revenue less explicit and implicit costs The difference between cash brought in and cash paid out Opportunity cost of resources previously owned Which of the following are based on both explicit and implicit costs? Economic profits Constant returns to scale Economies of scale Accounting profits The quantity demanded in the widget market is significantly greater than the quantity found at the bottom of the LRAC. Based on this information, which of the following is likely to occur? Only one firm will produce and sell widgets. Many firms will compete in the widget market. A monopoly will form in the widget industry. Most firms will experience diseconomies of scale. Market demand and the LRAC determine which of the following? The number of firms that will exist in an industry The number of firms with diseconomies of scale The level of output for…