You are an assistant to a senator who chairs an ad hoc committee on reforming taxes on telecommunication services. Based on yourresearch, AT&T has spent over $15 million on related paperwork and compliance costs. Moreover, depending on the locale, telecomtaxes can amount to as much as 25 percent of a consumer's phone bill. These high tax rates on telecom services have become quitecontroversial, due to the fact that the deregulation of the telecom industry has led to a highly competitive market. Your best estimatesindicate that, based on current tax rates, the monthly market demand for telecommunication services is given by Qa = 200 – 5P andthe market supply (including taxes) is Q = 2P – 150 (both in millions), where P is the monthly price of the telecommunication services.The senator is considering tax reform that would dramatically cut tax rates, leading to a supply function under the new tax policy of Q= 2.4P – 150. How much money per unit would a typical consumer save each month as a result of the proposed legislation?Instruction: Enter your response rounded to the nearest penny (two decimal places).2$

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Since the early 1970’s, the U.S. government has had a program called the Earned Income Tax Credit. A simplified version of this program works as follows: The government subsidizes your wages by paying you 50% in addition to what your employer paid you but the subsidy applies only to the first $60 (per day) you receive from your employer. If you earn more than $60 per day, the government gives you only the subsidy for the first $60 earned but nothing for anything additional you earn. For instance, if you earn $100 per day, the government would give you 50% of the first $60 you earned — or $30. Suppose you consider workers 1 and 2. Both can work up to 10 hours per day at a wage of $10 per hour, and after the policy is put in place you observe that worker 1 works 7 hours per day while worker 2 works 5 hours per day. Assume throughout that Leisure is a normal good. (a) Illustrate these workers’ budget constraints with and without the program. (b) Can you tell whether the program has…
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Refer to Figure 2. Suppose the government imposes a tax of $0.60 per soft drink purchased. When it comes to the economic incidence, who is bearing the tax burden, buyers, or sellers? Explain using actual numbers .......... 1) Suppose the government introduces a ceiling on the fees that lawyers are permitted to charge. This fee ceiling A) is always inefficient. B) results in an inefficient use of resources when the ceiling is above the equilibrium fee. C) results in an efficient use of resources when the ceiling is above the equilibrium fee. D) results in an efficient use of resources when the ceiling is below the equilibrium fee. E) is always efficient. 2) An effective rent ceiling A) increases producer surplus. B) results in a producer surplus of zero. C) sometimes increases producer surplus and sometimes decreases producer surplus. D) decreases producer surplus. E) decreases the supply of housing.

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