The government tax revenue is REV = tw*(t)N*(t). Among the options provided below, whichtax rate yields the largest tax revenue?0.25 (i.e. 25%)0.5 (i.e. 50%)0.75 (i.e. 75%)0.99 (i.e. 99%) Consider the decisions of a representative consumer whose preferences are given by:u(C,1) = In C+ Inlwhere C is the quantity of consumption and 1 is the quantity of leisure.The consumer faces two constraints.The time constraint is given by 1 + N³ = 1, with N³ as the time spent working (or the laborsupply). Further, consumer take wages as given and obtain after-tax labor income that is equal tow(1t)Ns where t is the income tax rate (0 < t < 1). Thus the consumer's budget constraint isgiven byC = w(1 − t)(1 − 1) + πwhere is the real dividend income received from the representative firm (i.e. firm profits).

Step 1:Government Revenue Function (REV): The government's tax revenue is given by REV = tw(1-t)N,…

Answered: The government tax revenue is REV =…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the decisions of a representative consumer whose preferences are given by: u(C,1) = In C+ Inl where C is the quantity of consumption and 1 is the quantity of leisure. The consumer faces two constraints. The time constraint is given by 1 + N³ = 1, with N³ as the time spent working (or the labor supply). Further, consumer take wages as given and obtain after-tax labor income that is equal to w(1t)Ns where t is the income tax rate (0 < t < 1). Thus the consumer's budget constraint is given by C = w(1 − t)(1 − 1) + π where is the real dividend income received from the representative firm (i.e. firm profits).
Consider a utility function defined over hours of leisure and consumption expenditure: U(c, h) ch. The after- tax wage rate is given by w and the amount of nonwage income, by N. Assume the number of hours of leisure in a year is 8000. Potential annual income, I, is given by 1-8000wN. It is allocated over hours of leisure, which cost wh, and consumption expenditure, c. The budget constraint is thus 8000wN-cwh 0. 1. Find the demand functions for leisure and consumption. a. Write the Lagrangean function for this problem. b. Find the first order conditions. c. Solve the first order conditions to obtain the condition that the MRS wage rate. Show your steps in the solution. d. Use the results from c to obtain the expansion path
A4
Now assume that the utility function takes the function form u(c) = ln(c). Note that the derivative of the natural logarthm is u'(c) = 1/c .
solve this all these three subparts early i upvote
An electric power distributor charges residential customers $0.10 perkilowatt-hour (kWh). The company advertises that “green power” is available in 150 kWh blocks for an additional $4 per month. (Green power is generated from solar, wind power, and methane sources). Solve, a. If a certain customer uses an average of 400 kWh per month and commits to one monthly 150 kWh block of green power, what is her annual power bill? b. What is the average cost per kWh with green power during the year? c. Why does green power cost more than conventional power?
Consider the two period consumption savings problem faced by an individual whose utility is defined on period consumption. This utility function u(c) has the properties that it is strictly increasing and concave, u'(c) > 0, u"(c) < 0 (where u'(c) denotes the first derivative while u"(c) represents the second derivative) and satisfies the Inada condition lim.-→0 u'(c) approaches zero). The individual's lifetime utility is give by u(cı) + Bu(c2). In the first period of life, the individual has y1 units of income that can be either consumed or saved. In order to save, the individual must purchase bonds at a price of q units of the consumption good per bond. Each of these bonds returns a single unit of the consumption good in period 2. Total savings through bond purchases is s1 so that total expenditures on purchasing bonds is qs1. Let c1 denote the amount of consumption in period 1 chosen by the individual. In the second period of life, consumption in the amount c2 is financed out of the…
how to construct, how do you kno which values map to what?(p1 * w1 + p * w)
Rodrigo is taking a year between high school and college to work and save up. His utility from consumption each year is U(c) = discounts future utility by B. Rodrigo is going to make $I his year of working, and whatever he doesn't consume from that income will a savings account which will earn return r before he consumes next year. He has to pay for school expenses E in year two, before he consumes (but after return has been realized). 1-o and he go into
James has a wage income of $50.000 in the present and $200.000 in the future. His utility is given as U = min (2Cp, Cr) - that is, his utility is the lesser of twice the dollars spent on present consumption or the dollars spent on future consumption. The interest rate is 30%. (A) What is the minimum amount of money James would be willing to accept today to have the interest rate at 40% rather than 30%? Explain and show work (B) What is the maximum amount of money James would pay today to have the interest rate at 30% rather than 40%? Explain and show work
Define time preferences for consumption
3) Marco has $100 worth of grain in period 1 but gets no grain in period 2. Marco has two choices. He can store the grain that he does not consume in period 1. This results in a loss of 20% of the grain due to pests. Assume that with this option he will choose to consume 68 units of grain in period 1 and 26 units in period 2. Instead, Marco can sell the grain he does not consume in period 1 and lend the money from that sale to someone today at an interest rate of 10%. He can then use the repayment of that loan to buy gain in period 2. a) Based on this information, draw a diagram that outlines Marco's choices. Is he definitely better off once the opportunity to lend is available to him? b) Relative to his initial equilibrium point, does he unambiguously consume more in both periods once he can lend out the excess he does not consume in period 1? c) Now assume that Marco can sell any excess grain he doesn't consume in period 1 and invest the money he gets in a new type of risky activity.…

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