You are an assistant to a senator who chairs an ad học committee on reforming taxes on telecommunication services. Based on your research, AT&T has spent over $15 million on related paperwork and compliance costs. Moreover, depending on the locale, telecom taxes can amount to as much as 25 percent of a consumer's phone bill. These high tax rates on telecom services have become quite controversial, due to the fact that the deregulation of the telecom industry has led to a highly competitive market. Your best estimates indicate that, based on current tax rates, the monthly market demand for telecommunication services is given by Qª = 200 – 5P and the market supply (including taxes) is QS = 2P – 150 (both in millions), where P is the monthly price of the telecommunication services. The senator is considering tax reform that would dramatically cut tax rates, leading to a supply function under the new tax policy of QS = 2.4P – 150. How much money per unit would a typical consumer save each month as a result of the proposed legislation? Instruction: Enter your response rounded to the nearest penny (two decimal places). 2$

Doyle and Samphantharak (2008) find that when a 5% gas tax is implemented, prices consumers pay for gas increase by about 4%. What role does demand elasticity play in determining the size of this price change? That is, under what demand elasticity cases would the price change be closer to 5%, or closer to 0%? Illustrate and explain using supply-and-demand graph(s)..

18. Suppose that corporate income tax in Japan is 30% for large enterprises. And one of them is Nissan Japan. Assume that Nissan Japan places its electric vehicles (EV) factory in California, USA by setting up Nissan America. California charges enterprises with a 10% corporate (flat) income tax rate. Suppose the demand of Nissan EV in Japan is p=220-2Q (p: price in one hundred thousand yen, Q is number of EV per week). Costs of transporting EV cars from California to Japanese customers and taxes and fees related to export-import activities are assumed to be zero. Its production cost in California is constant at 20 per unit. If Nissan American sells EVS produced in California to Nissan Japan at its production cost, what are the combined net profits of all Nissans and total corporate income tax the Nissan Japan has to pay (per week)? (Note: Nissan Japan will use the transfer price as its marginal cost.) ONet profit=5000; Sum of corporate tax=1500 Net profit=3500; Sum of corporate…

Since the early 1970’s, the U.S. government has had a program called the Earned Income Tax Credit. A simplified version of this program works as follows: The government subsidizes your wages by paying you 50% in addition to what your employer paid you but the subsidy applies only to the first $60 (per day) you receive from your employer. If you earn more than $60 per day, the government gives you only the subsidy for the first $60 earned but nothing for anything additional you earn. For instance, if you earn $100 per day, the government would give you 50% of the first $60 you earned — or $30. Suppose you consider workers 1 and 2. Both can work up to 10 hours per day at a wage of $10 per hour, and after the policy is put in place you observe that worker 1 works 7 hours per day while worker 2 works 5 hours per day. Assume throughout that Leisure is a normal good. (a) Illustrate these workers’ budget constraints with and without the program. (b) Can you tell whether the program has…

Which of the following is true?   Once the equilibrium price and output is reached, all the mutually beneficial trade opportunities between suppliers and demanders will have taken place, and the sum of consumer and producer surplus is maximized.   The deadweight loss of a tax is the difference between the lost consumer and producer surplus and the tax revenue generated.   Those goods that are heavily taxed often have a relatively inelastic demand curve in the short run, so that the burden falls mainly on the buyer, and the deadweight loss to society is smaller than if the demand curve was more elastic.   All of the above are true.   Give the answer  with proper explanation & Only typed Answer

Nobel Prize-winning economist Gary Becker suggested that prohibited drugs should be legalized and then taxed. This would the seller's cost and government revenue. a) increase; decrease b) decrease; increase c) increase; increase d) decrease; decrease

Consider an ad-valorem tax on a good X. The Demand for good X is constant elasticity with elasticity -2. The Supply for good Y is constant elasticity with elasticity 3. Consider the same setting as for the previous question. When a tax of 1% of the price is imposed on good X, then equilibrium quantity of X exchanged declines by what percentage?

If a $6 per unit excise (sales) tax is imposed, who will suffer the greater burden of this tax, the suppliers or demanders?     a) Demanders     b) Suppliers     c) Both share the burden equally     d) Can't tell from the available information

The demand function D(p) = 200 - 4p and supply function is S(p)= 6p Find the equilibrium price and quantity If government collect $10 unit tax from each product, find the equilibrium demand and supply prices. How much tax revenue is collected? What is the deadweight loss amount as a result of taxation?

Refer to Figure 2. Suppose the government imposes a tax of $0.60 per soft drink purchased. When it comes to the economic incidence, who is bearing the tax burden, buyers, or sellers? Explain using actual numbers   .......... 1) Suppose the government introduces a ceiling on the fees that lawyers are permitted to charge. This fee ceiling A) is always inefficient. B) results in an inefficient use of resources when the ceiling is above the equilibrium fee. C) results in an efficient use of resources when the ceiling is above the equilibrium fee. D) results in an efficient use of resources when the ceiling is below the equilibrium fee. E) is always efficient.   2) An effective rent ceiling A) increases producer surplus.                                   B) results in a producer surplus of zero. C) sometimes increases producer surplus and sometimes decreases producer surplus. D) decreases producer surplus.                                   E) decreases the supply of housing.