International Edition---microeconomics, 9th Edition
9th Edition
ISBN: 9780134674551
Author: Robert Pindyck And Daniel Rubinfeld
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 4, Problem 9RQ
To determine
Impact of tax and tax rebate.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
President Vladimir Putin of Russia proposed replacing in-kind subsidies such as free public transportation and rent-free apartments for government workers with cash subsidies of between $20 and $120 per month. The proposal led to widespread complaints among Russian citizens that the cash subsidies were not large enough. One reportedly asked, “What is a perk worth?”
Use an indifference curve analysis to show how to convert an in-kind subsidy into a cash subsidy that leaves people equally well off.
A result of welfare economics is that the equilibrium price of a product is considered to be the best price because it
Consider a person who
consumes water and bread, deriving utility by xy if x is the amount of water consumed and
y is the amount of bread consumed. Suppose this person's income is Rs. 10, the unit
price of bread is Rs. 3 and the unit price of water facing this person is Re. 1. The price of
water incorporates a per unit subsidy of Re. 1, i.e., for every unit of water consumed by
this person, she pays Re. 1 to the water supplier and the government pays Re. 1 to the
water supplier. Suppose this person's demand is (x0, y0). ,If the government provides this person a lump-sum income subsidy that exactly offsets
her utility loss on account of removal of the water subsidy, then the required lump-sum
subsidy is
Chapter 4 Solutions
International Edition---microeconomics, 9th Edition
Ch. 4.A - Prob. 1ECh. 4.A - Prob. 2ECh. 4.A - Prob. 3ECh. 4.A - Prob. 4ECh. 4.A - Prob. 5ECh. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQ
Ch. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - Prob. 9RQCh. 4 - Prob. 10RQCh. 4 - Prob. 11RQCh. 4 - Prob. 12RQCh. 4 - Prob. 1ECh. 4 - Prob. 2ECh. 4 - Prob. 3ECh. 4 - Prob. 4ECh. 4 - Prob. 5ECh. 4 - Prob. 6ECh. 4 - Prob. 7ECh. 4 - Judy has decided to allocate exactly 500 to...Ch. 4 - The ACME Corporation determines that at current...Ch. 4 - Prob. 10ECh. 4 - Prob. 11ECh. 4 - Prob. 12ECh. 4 - Prob. 13ECh. 4 - Prob. 14ECh. 4 - Prob. 15ECh. 4 - Prob. 16E
Knowledge Booster
Similar questions
- Suppose that there is a scrappage scheme which only provides a partial subsidy: if the citizen buys the new car, she receives a subsidy of 2, 000. What is the citizen’s utility of buying the new car? What is her utility of buying the old car? Does the citizen prefer to buy the new car?arrow_forwardSuppose buyers are affected when a new tax on soda is introduced to curb obesity. What action do the sellers take when there is a reduction in the soda tax? Demonstrate the change in the graph below by shifting the appropriate curve.arrow_forwardceteris paribus a consumer that purchases a sports car must consider the price of gasoline because these goods arearrow_forward
- If the minimum wage is set above the equilibrium wage, the quantity of labor supplied by workers is less than the quantity demanded by employers. a. true b. false If the price of a product rises by an amount less than the established tax, the buyers bear the tax. a. true b. false The budget line or budget constraint represents each and every one of the different combinations where we exhaust our budget and reach the same level of satisfaction in any combination. a. true b. false *if you answer correctly you will have a good rate uparrow_forwardIf the social welfare function produces concave social welfare indifference curves, social welfare can be increased by reallocating income between households if their marginal utilities of income differ. TRUE OR FALSEarrow_forwardThe government wants to make medicare benefits available to more people, but to achieve this goal, it needs to make cuts in the existing medicare budget. The two areas where they are considering cuts are non-essential elective surgery and 6-12 month mental health care programs. Applying the concept of diminishing marginal utility, the budget cuts should be made for spending on: a. neither can be compared by measuring marginal utility. b. mental health therapy due to its higher marginal return rate. c. elective surgery due to its lower marginal return rate. d. both programs, which have the same marginal return rate.arrow_forward
- Suppose a person is endowed with Bundle A and the price of X is $10 and the price of Y is $1 on the blue budget line. Group of answer choices If he sells all the good X he is endowed with, he will move from Bundle A to E. If he sells all the good X he is endowed with, he will move from Bundle A to C. If he sells all the good X he is endowed with, he will move from Bundle A to B. If he sells all the good X he is endowed with, he will move from Bundle A to D.arrow_forwardShow using well labeled diagrams how you would derive the Marshallian Demand curve and compensated demand curve holding utility constant for an Inferior good X for a consumer maximizing her welfare subject to a budget constraint.arrow_forwardUnderstanding ________ allows economists to determine what people are likely to purchase and model consumer satisfaction. Group of answer choices consumers’ trade-offs the substitution effect the real-income effect the diamond-water paradox utility in terms of satisfactionarrow_forward
- Which of the following is an example of an intermediate good? Group of answer choices The chocolate you buy to make yourself some cookies. The dough you buy to fix yourself a pizza for dinner. None of the above The pizza sauce you purchase to make pizzas to sell for a fund-raiser for an organization you belong to.arrow_forwardConsider your preferences for Gasoline (X) and a composite good (Y). Your utility function is U(X,Y) = X^(2/5 )+ Y^(2/5). You have an annual income of $40,000. Suppose the price of the composite good is $1. a) Due to shortages, the government has introduced a rationing system such that you can only consume a maximum of 5,000 liters a year at $1 a liter. What would be your optimal consumption bundle? b) The government removes the rationing system and the free market price of gasoline jumps to $2. What would be your new optimal consumption bundle? Are you better off with or without the rationing? Show by finding the utility levels. c) Illustrate your solution in a clearly labeled graph.arrow_forwardNow, imagine that instead of the subsidy the UK government had responded to the cost-of-living crisis by subsidising both energy and food demand through a subsidy to producers resulting in a reduction of both energy prices and food prices by 10%. Using the same indifference curve of point a., what is the optimal level of consumption of energy following such intervention? How much of the change in quantity of each good consumed is due to an income effect and how much to a substitution effect? please could you answer this showing a diagram of the indifference curve movement. could you do food on the y axis and energy on the x axis.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning