Q11.The state of Delaland has two types of town. Type A towns are well-to-do, and type B towns are much poorer. Being wealthier, type A towns have more resources to spend on education; their demand curve for education is Q= 100 - 2P, where P is the price of a unit of education. Type B towns have a demand curve for education which are given By Q= 100 - 4P. (a) The cost of a unit of education is $20 per unit. How many units of education will the Two types of town demand? (b) IN light of the large discrepancies in educational quality across their two types of Town, Delaland decides to redistribute from type A towns to type B towns. In particular, They tax type A towns by $5 for each unit of education they provide, and they give type B towns $5 for each unit of education they provide. What are the new tax prices of Education in the two towns? How many units of education do the towns now purchase? (c) Delaland wants to completely equalize the units of education across towns by taxing Type A towns for each unit of education they provide and subsidizing type B towns for Each unit of education they provide. It wants to do this in such a way that the taxes on Type A towns are just enough to finance the subsidies on type B towns. If there are Three type A towns for every four type B towns, how big a tax should Delaland levy on Type A towns? How big a subsidy should they provide to type B towns?
Q11.The state of Delaland has two types of town. Type A towns are well-to-do, and type B towns are much poorer. Being wealthier, type A towns have more resources to spend on education; their demand curve for education is Q= 100 - 2P, where P is the price of a unit of education. Type B towns have a demand curve for education which are given By Q= 100 - 4P. (a) The cost of a unit of education is $20 per unit. How many units of education will the Two types of town demand? (b) IN light of the large discrepancies in educational quality across their two types of Town, Delaland decides to redistribute from type A towns to type B towns. In particular, They tax type A towns by $5 for each unit of education they provide, and they give type B towns $5 for each unit of education they provide. What are the new tax prices of Education in the two towns? How many units of education do the towns now purchase? (c) Delaland wants to completely equalize the units of education across towns by taxing Type A towns for each unit of education they provide and subsidizing type B towns for Each unit of education they provide. It wants to do this in such a way that the taxes on Type A towns are just enough to finance the subsidies on type B towns. If there are Three type A towns for every four type B towns, how big a tax should Delaland levy on Type A towns? How big a subsidy should they provide to type B towns?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:Q11.The state of Delaland has two types of town. Type A towns are well-to-do, and type B towns are
much poorer. Being wealthier, type A towns have more resources to spend on education; their
demand curve for education is Q = 100 - 2P, where P is the price of a unit of education. Type B towns
have a demand curve for education which are given By Q = 100 - 4P.
(a) The cost of a unit of education is $20 per unit. How many units of education will the Two types
of town demand?
(b) IN light of the large discrepancies in educational quality across their two types of Town,
Delaland decides to redistribute from type A towns to type B towns. In particular, They tax
type A towns by $5 for each unit of education they provide, and they give type B towns $5 for
each unit of education they provide. What are the new tax prices of Education in the two
towns? How many units of education do the towns now purchase?
(c) Delaland wants to completely equalize the units of education across towns by taxing Type A
towns for each unit of education they provide and subsidizing type B towns for Each unit of
education they provide. It wants to do this in such a way that the taxes on Type A towns are
just enough to finance the subsidies on type B towns. If there are Three type A towns for
every four type B towns, how big a tax should Delaland levy on Type A towns? How big a
subsidy should they provide to type B towns?
t of
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
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
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education