Pls solve both questions with proper explanation , otherwise I will give you downvote Consider an individual that lives for two periods. The utility function is U(c1, c2) = c,05 c205, where c; isconsumption in period i, i=1,2.The price of c1 and c2 is 1. The labor income in the first period is Y =200€ and inthe second Y2 =50€ The interest rate is r= 0.1 (i.e., 10%). There is a proportional tax on labor income oft = 0.25, i.e. 25% (in both periods). There is also a tax on capital income of t = 0.2, i.e., 20%. The tax on capitalincome has an exemption of 2, i.e. the first 2 euros do not pay taxes, but the rest of the capital income is taxedat the rate 20% (there is no exemption for the labor income). A) Find private savings, S.Select one:O a. S=107.454O b. S=51.3317O c. S=57.4535O d. S=99.9502Continue with the same economy as in the previous question.B) Find a new capital income tax, tk, with no exemption such that the tax revenue is the same as in part A)(we keep the labor income tax constant). Which capital income tax does the agent prefer, the original one,tk = 0.2, with that exemption of 2, or the new one, t'k, with no exemption? (if you solve an equation and gettwo roots, take the one with the lowest value)Select one:O a. t*=0.129706. The agent prefers the tax of the previous question because of the exemptionO b. t*=0.129706. The agent prefers this new taxO c. ty*=0.1666. The agent prefers the tax of the previous question because of the exemptionO d. t*=0.1666. The agent prefers this new tax

For an intertemporal choice problem optimizing condition is that utility is maximized given the…

Consider an individual that lives for two periods. The utility function is U(c1, c2) = c1 c20, where c; is 0.5 0.5 consumption in period i, i=1,2.The price of c1 and c2 is 1. The labor income in the first period is Y =200€ and in the second Y2 =50€ The interest rate is r= 0.1 (i.e., 10%). There is a proportional tax on labor income of t 0.25, i.e. 25% (in both periods). There is also a tax on capital income of t = 0.2, i.e., 20%. The tax on capital income has an exemption of 2, i.e. the first 2 euros do not pay taxes, but the rest of the capital income is taxed at the rate 20% (there is no exemption for the labor income). A) Find private savings, S.

Consider an individual that lives for two periods. The utility function is U(c1, c2) = c1 c20, where c; is 0.5 0.5 consumption in period i, i=1,2.The price of c1 and c2 is 1. The labor income in the first period is Y =200€ and in the second Y2 =50€ The interest rate is r= 0.1 (i.e., 10%). There is a proportional tax on labor income of t 0.25, i.e. 25% (in both periods). There is also a tax on capital income of t = 0.2, i.e., 20%. The tax on capital income has an exemption of 2, i.e. the first 2 euros do not pay taxes, but the rest of the capital income is taxed at the rate 20% (there is no exemption for the labor income). A) Find private savings, S.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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