ECON MICRO (with ECON MICRO Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
5th Edition
ISBN: 9781305631946
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 3, Problem 3.10P
To determine
The taxes for various income.
Introduction:
Progressive tax rate: It is defined as the system wherein taxes increase as the income increases, wherein high-income taxpayers pay more taxes as compared to the low-income taxpayers.
Regressive tax rate: It is defined as the system wherein the taxes decrease as the income increases, wherein high-income taxpayers pay fewer taxes as compared to low-income taxpayers
Proportionate tax rate: It is defined as the system wherein a flat tax rate is charged to all taxpayers irrespective of the income earned by them.
Marginal tax rate: The tax paid on an additional dollar of the income is termed as the Marginal tax rate. In other words, it is an incremental tax paid on the incremental income
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2. A firm’s production function is given by:Q = 10KLThe unit capital and labour costs are 2 and 1 pounds respectively. The firm is contracted to produce2000 units.(a) Write out the optimisation problem of the firm. (b) Express this problem using a Lagrangian function. (c) Find values of K and L which fulfil the contract with minimal cost to the firm. (d) Calculate the total cost to the firm.
3. Consider the following estimated regression equation, estimated using a sample of firms, where RDis total firm spending on research and development in USD ($), Revenue is total firm revenuein USD ($), and W ages is the firms’ total spending on wages in USD ($) (standard errors inparentheses):RDd = 1000(600)+ 0.5(0.1)Revenue + 1.5(0.5)W ages,(a) Interpret the coefficients on each of the explanatory variables. (b) Which of the three coefficients are statistically significant at the 5% level of significance? Howdo you know? A researcher runs a two-sided statistical test of the null hypothesis that both the coefficients onthe explanatory variables above are jointly equal to 0.25 (mathematically, that β1 = β2 = 0.25),and reports a p-value of 0.045.(c) What does this p-value mean for the outcome of the test? (d) What would an appropriate two-sided alternative hypothesis look like?
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ECON MICRO (with ECON MICRO Online, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
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