Exploring Economics
8th Edition
ISBN: 9781544336329
Author: Robert L. Sexton
Publisher: SAGE Publications, Inc
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 9, Problem 1P
Why would means-tested transfer payments (such as food stamps, in which benefits are reduced as income rises) act like an income tax facing recipients?
Expert Solution & Answer
To determine
The reason behind means-transfer payment acting as an income tax facing recipients.
Explanation of Solution
For example, a thirty percent benefit reduction rate costs to a thirty percent income tax, except it is paid via receiving lower benefits. So when the benefits are reduced as income rises, it also reduces how much recipients keep of additional earnings like taxes.
Economics Concept Introduction
Concept Introduction:
In the case of income tax, as the income increases, the tax liability will also increase. And as the reason the means-transfer payment like food stamps act as an income tax facing recipients.
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Problem 3
Simple Bivariate Regression
Consider the following bivariate regression model:
NAMEUIN
Page 1 of 2
=
Hourly Wages, Bo+B₁Education; + &
where Education measures the years of experience at the job for an individual and
Hourly Wage is the hourly wage in dollars. The subscript i indexes various people. You run
a bivariate OLS regression to estimate Bo and B₁.
Suppose you estimate B = 10 and B
a.
0
= 2
How do you interpret the estimates ßo and ß₁ in this context? (3 points)
1
b. Define the terms "predicted/fitted value" and "residual”. (3 points)
c. Suppose that for some individual, the predicted value of Hourly Wage is $20, and
the residual is 2. What is the actual Hourly wage for the individual? Show your
work. (4 points)
d. Suppose that some individual has 10 years of Education, and his actual hourly wage
is $35. What is the predicted outcome and residual for this individual? Show your
work. (5 points)
Problem 1
The Core Model
Suppose you are interested in studying the effect of workers' training (measured by the
number of training hours) on employee productivity (measured by output per hour).
a. What is the dependent and independent variable in this setting? (2 points)
b. How would you write this relationship using the Core Model? (3 points)
C.
Do you expect the slope coefficient ẞ₁, (which shows relation between teacher's
experience and test scores) to be positive or negative? Explain your reasoning. (5
points)
d. Name any two factors that are likely included in the error term of your model? (5
points)
Problem 2
Endogeneity
Suppose you are interested in how social media usage affects students' academic
performance. Consider the following model:
GPA; = ßo + ß₁Social Media Hours; + ɛ;
where GPA, is the grade point average of a student and Social Media Hours; measures
how many hours the student spends on social media every week. Each student is denoted by
the subscript i.
a.
What is the dependent variable Y in this setting? What is the independent variable X
in this setting? (4 points)
b. What does Bo
C. What does ẞ1
= 3 mean? (2 points)
= 0.2 mean? (3 points)
d. What is the condition for the independent variable Social Media Hours; to be
endogenous? (5 points)
e. Is the independent variable likely to be endogenous? Why or why not? (3 points)
f. If yes, describe a scenario where the independent variable is endogenous. (3 points)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- Not use ai pleasearrow_forwardNot use ai pleasearrow_forwardRound Tree Manor is a hotel that provides two types of rooms with three rental classes: Super Saver, Deluxe, and Business. The profit per night for each type of room and rental class is as follows. Rental Class Super Saver Deluxe Business Room Type I Type II $30 $35 $20 $30 $40 Round Tree's management makes a forecast of the demand by rental class for each night in the future. A linear programming model developed to maximize profit is used to determine how many reservations to accept for each rental class. The demand forecast for a particular night is 140 rentals in the Super Saver class, 50 rentals in the Deluxe class, and 40 rentals in the Business class. Round Tree has 100 Type I rooms and 120 Type II rooms. (a) Formulate and solve a linear program to determine how many reservations to accept in each rental class and how the reservations should be allocated to room types. (Assume S₁ is the number of Super Saver rentals allocated to room type I, S₂ is the number of Super Saver…arrow_forward
- Don't used hand raitingarrow_forwardWhat is the impact of population and demographic trends on our society? How does this continuation of growth impact our project supplies of goods and services? Be specific in your response.arrow_forwardPlease review "Alaska Ranked Choice Voting Implementation" for information to answer , What is the benefit of ranking multiple choices?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Survey of Economics (MindTap Course List)EconomicsISBN:9781305260948Author:Irvin B. TuckerPublisher:Cengage LearningExploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Survey of Economics (MindTap Course List)
Economics
ISBN:9781305260948
Author:Irvin B. Tucker
Publisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
DATA GEMS: How to Access Income Data Tables and Reports From the CPS ASEC; Author: U.S. Census Bureau;https://www.youtube.com/watch?v=BWpVC-Clczw;License: Standard Youtube License