QUESTIONS T. Your best income-earning opportunity appears airplanes, and jewelry
ID: 1104280 • Letter: Q
Question
QUESTIONS T. Your best income-earning opportunity appears airplanes, and jewelry. Proponents saw the levy as an to be an offer to work for a local developer during the effective means of taxing the rich. Critics pointed out that month of June and earn $2,000. However, before taking those bearing the hardship of a tax may or may not be the the job, you accept a surprise offer from a competitor. If same as those who pay the tax (the point of tax incidence). you actually earn $2,600 during the month, how much Explain how the elasticities of supply and demand in producer surplus have you earned? Explain. competitive markets can have direct implications for Q11.2 Assume that you are willing to pay $1,100 the ability of buyers and sellers to shift the burden of for a new personal computer that has all the "bells taxes imposed upon them. Also explain how elasticity and whistles." On the Internet, you buy one for the information has implications for the amount of social bargain price of $900. Unbeknownst to you, the Internet welfare lost due to the deadweight loss of taxation. retailer's marginal cost was only $750. How much Q11.7 Both employers and employees pay Social consumer surplus, producer surplus, and net addition Security (FICA) on wage income. While the burden of to social welfare stems from your purchase? Explain. this tax is designed to be borne equally by employers Q11.3 After having declined during the 1970s and and employees, is a straight 50/ and employees, is a straight 50/50 sharing of the FICA 1980s, the proportion of teenage smokers in the United tax burden likely? Explain. States has risen sharply since the early 1990s. To reverse Q11.8 The Fair Labor Standards Act establishes a this trend, advertising programs have been launched federal minimum wage of $7.25 per hour effective to discourage teenage smoking, penalties for selling July 24, 2009. Use your knowledge of market cigarettes to teenagers have been toughened, and the equilibrium and the elasticity of demand to explain how excise tax on cigarettes has been increased. Explain an increase in the minimum wage could have no effect how each of these public policies affects demand for on unskilled worker income. When will increasing cigarettes by teenagers. the minimum wage have an income-increasing effect Q11.4 In 2004, OPEC reduced the quantity of oil it versus an income-decreasing effect. Which influence is was willing to supply to world markets. Explain why more likely? the resulting price increase was much larger in the Q11.9 The New York City Rent Stabilization Law of short run than in the long run. 1969 established maximum rental rates for apartments Q11.5 The demand for basic foodstuffs, like feed in New York City. Explain how such controls can los un, and other grains, tends to be inelastic with respect to price. Use to shortages, especially in the long run, and oth this fact to explain why highly fertile farmland will economic costs. Despite obvious disadvantages, why fetch a relatively high price at any point in time, but does rent control remain popular? that rising farm productivity over time has a negative Q11.10 Wal-Mart founder Sam Walton amasse overall influence on farmland prices. enormous fortune in discount retailing, one of the Q11.6 In 1990, Congress adopted a luxury tax to viciously competitive markets imaginable. How be paid by buyers of high-priced cars, yachts, private possible?Explanation / Answer
Question 11.1
We have accepted the job offer with income of $2,600.
By accepting this job offer, we have rejected the next best job offer with income of $2,000.
The cost of next best alternative foregone is referred to as the opportunity cost.
So, the opportunity cost for us in this choice of job offers is $2,000.
Calculate the Producer Surplus -
Producer Surplus = Actual income earned - Opportunity cost = $2,600 - $2,000 = $600
The Producer Surplus earned is $600.