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

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Explain and demonstrate using appropriate examples, how elasticity when it is zero is applied at the level of the government with respect to the setting of prices for various types of goods and services. (Macroeconomics)
Compare placing a tax on gasoline to a mandated increase in the average fuel efficiency of each car in terms of reducing the usage of gasoline, reducing greenhouse gases, and also providing consumers with choice in their vehicle selection. Analyze the impact on consumers, service stations, and car manufacturers.
Amy is a graduate student living in Dallas who works as a caddy to supplement their normal income. At an hourly wage rate of $15, they are willing to caddy 5 hours per week. Upping the wage to $25 per hour, they are willing to caddy 14 hours per week. Using the midpoint method, the elasticity of Amy’s labor supply between the wages of $15 and $25 per hour is approximately (0.06, 0.53, 1.89, 10.56) , which means that Amy’s supply of labor over this wage range is (elastic/inelastic) .
Assuming a supply function of Qs = 100+100p and a demand function of Qd = 700-50p and an equilibrium price of $4 with an equilibrium quantity of 500million gallons please answer the last question regarding the deadweight loss.
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…
Consider the demand and supply for strawberries to be given by Qd= 10-0.33P and Qs=-6+P and the government imposes per unit tax of $T, such that the total government revenue of $32 is generated at a new equilibrium price of $18. What is the amount of per unit tax in this case? OPTIONS: (i) $8 (ii) $1.77 (iii) $10 (iv) $12
Suppose you are an aid to the Odododiodo Member of Parliament who is concerned about the impact of a new tax on the welfare on his constituents. You have explained to him that one of the ways he can determine the impact is to calculate the price elasticity as well as the consumer surplus. Conduct a formal analysis by undertaking the following exercises when the demand and supply functions for the goods in question are given as Qd=500-5p and Qs=2p-60 a. Sketch the supply and the demand curves.b. Calculate the equilibrium price and quantity.c. If government imposes a tax of ¢2 on this commodity, calculate the new price and quantity afterthe imposition of the taxd. Calculate the consumer surplus before the taxe. Calculate the own price elasticity of demand before the imposition of the tax.
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…
The greater the price elasticity of supply and demand, the more the market volume decreases when excise tax is imposed. Therefore, the net economic loss is large, and the one with less price elasticity among consumers and suppliers is relatively pay less tax
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

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