Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
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Question
Chapter 14, Problem 14.8P
a)
To determine
To discuss the reason for lump-sum subsidy not helping government achieve its goal.
b)
To determine
To show graphically how per-unit subsidy will help the government achieve its goal.
c)
To determine
To show that
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a. Does the market provide an efficient amount of effort?
b. The teacher of the course is considering to implement a tax-cum-subsidy policy in order to enhance effort in the course. Suppose he seeks advice from you. He proposes to subsidize effort at the rates, meaning that putting G, units of time into working on the problem sets will feel less, concretely, only like putting (1-s)G, units of time. In order to subsidize effort, he will tax students' time at the rate t, so the total available time will become(1-1)W₁. What tax-subsidy combination would you propose in order to implement the social optimum while keeping budget balance?
Suppose government impose a tax of 1 dollar per bottle on sellers of industrial detergent. Explain 3 dimensions in which you can explain the effect of this tax.
=
150 - 10PD,
2-4 Suppose the annual demand for cotton is given by the demand curve QD
and the supply is Qs = 10Ps - 50. Now U.S. government decide to impose a subsidy
for farmers of $2 per pound. Please show all your calculation and draw graph clearly
with labeled areas.
a) Find the producer and consumer surplus if there is no subsidy.
b) Find what subsidy has changed the producer and consumer surplus, and is there any
government surplus and deadweight loss? Why?
c)
Would there be any difference if the government decide to give subsidy to buyers?
Explain with the graphs of comparing price, quantity, producer and consumer
surplus, government surplus and deadweight loss.
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