Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
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Question
Chapter 17, Problem 17.5P
a)
To determine
To find:
Affect on investment decision due to tax.
b)
To determine
To know:
Impact on capital input due to tax on profit.
c)
To determine
To know:
Affect on capital usage due to adoption of accelerated depreciation policies.
d)
To determine
To know:
Impact on capital usage due to decrease in corporate tax.
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Students have asked these similar questions
Question 5
A function g(z) is strictly increasing if g'(z) > 0 on its domain. Assume the supply and demand
functions for a high-tech product are
Qs = S(P),
Qp = D(P +T,Y),
%3D
where Y is the income, T is the consumption tax on the product, and P is the price. We don't
specify a particular analytical form of the supply and demand functions, but we assume that
both functions are well defined on their domains and their derivatives exist.
We also assume that S'(P) > 0 on its domain, and that
D(Z,Y) > 0,
D(Z,Y) < 0,
and
az
where Z = P+T.
Assume an equilibrium state exists in the sense that the supply and demand are balanced:
S(P) – D(P +T,Y) = 0.
(1) Assume Pis a function of Y. Is price (P) an increasing or decreasing function of income (Y)?
Show your working steps to support your answer.
(2) Assume Pis a function of T. Is price (P) an increasing or decreasing function of tax (T)? Show
your working steps to support your answer.
Which of the following statements regarding tax credits is true?
Group of answer choices
a. They are deductions that depend on the taxpayer’s filing status, age, and vision and that can be claimed by a taxpayer whose total itemized deductions are small.
b. They are deductions from adjusted gross income (AGI) based on the number of persons supported by the taxpayer’s income.
c. They represent the income remaining after subtracting all allowable adjustments to (gross) income.
d. They are personal expenditures that can be deducted from adjusted gross income (AGI) when determining taxable income.
e. They are deductions from a taxpayer’s tax liability that directly reduce his or her taxes due.
If the pre-tax cost function for John's Shoe Repair is
C(q) = 150+10g-2q² +0.333q³
and it faces a specific tax of $20, what is the profit-maximizing condition if the market price is p? Can you solve for a single, profit-maximizing q in terms of p?
The proft-maximizing quantity in terms of p is
q=(Property format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a fraction can be created with the /
character.)
Chapter 17 Solutions
Microeconomic Theory
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