EBK MACROECONOMICS
5th Edition
ISBN: 8220106773925
Author: KRUGMAN
Publisher: MAC HIGHER
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Chapter 10.A, Problem 2P
To determine
Concept Introduction:
Bonds: It is a type of promise or contract to pay in the future with certain limitations and conditions specified at the time of issuing the bond.
The present value of Amount: It is the quantity of money which is needed in the present time in order to gain an amount at the upcoming date at a specific interest rate.
The formula to calculate present value is,
- PV is the present value of amount.
- X is the future amount.
- n is the number of years.
- i is the interest rate.
Stock Price and Interest Rate: Stock Price and the interest rate are inversely related to each other. If the interest rate of the bond decrease then the stock price increases.
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The graph shows the supply and demand curves of high-fructose corn syrup, a sweetener commonly used in the production of
sweets and soda due to its low cost. In an effort to curb health issues, Congress puts an excise or commodity tax on corn syrup
at $2 per liter.
1. Shade in the region of the graph representing the total tax revenue that this tax will generate.
2. Shade in the region of the graph representing the deadweight loss that this tax will generate.
Price ($) per liter
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Demand
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10
Quantity (millions of liters)
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MacBook Air
Tax Revenue
Deadweight Loss
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