If you could answer any or all of these. Any answers will work. thank you 15. Dr
ID: 1141570 • Letter: I
Question
If you could answer any or all of these. Any answers will work. thank you
15. Draw three diagrams that illustrate the normative problems associated with positive and negative externalities a. Label all important details and briefly explain the nature of the problem. b. Show how Pigovian taxes or subsidies can be used to address the three problems c. Now, construct an example in which externalities exist, but the result is not a problem. d. Is there any easy way to distinguish part c from the over and under supply cases of part a in the real world? Explain. Additional Puzzles and Applications 16. President Obama's 2009 "stimulus program" can be thought of as a series of subsidies for various classes of goods and services. Consider just his program for mortgage refinance, whiclh reduces the cost of refinancing one's house. In the space below draw two diagrams. a. In the first diagram, show the case in which the entire value of the subsidy accrues to current asset owners (of mortgage backed securities) b. On a second diagram show the case in which the entire value of the subsidy accrues to purchasers of those assets. Label all important details in both diagrams including the cost and deadweight loss of the c. subsidy 17. Use the neutrality, deadweight loss (Ramsay) and net benefit (Buchanan) tax principles to analyze the relative merits of a high excise tax on gasoline, a flat (proportional) corporate income tax, and a. First assume that the same revenue is generated by each tax, and that all the revenue generated b. Next assume that the gasoline tax is "earmarked" so that it is entirely spent on transportation a consumption tax. will be spent on general government services services (roads, bicycle paths, and mass transit) and that the others are used to pay for general study gi de 1, page-4 government programs. How does this earmark affect your analysis of the merits of gasoline taxes under these two normative theories? Explain how positive analysis plays a role in your normative analysis of the relative merits of these tax instruments. (No diagrams are necessary for your answers, although they may help.) c. 18. During the early 1980s, the Reagan administration proposed a radical "flattening" of the tax schedule faced by ordinary US income tax payers. A very finely gradated tax schedule was replaced with one that included just three marginal tax rates 0, 15 and 28%, but generated roughly the same revenue as the previous more steeply progressive tax schedule. a. Analyze the effects of this tax reform using the tools developed in class. (Hint: use supply and demand for labor diagrams to show what happens to employment levels, dead weight loss, and tax payments for low, middle, and high income earners, whose marginal tax rate is reduced.) b. Discuss why reductions in marginal tax rates tend to reduce excess burder. c. Are there cases in which a reduction in tax rates can increase tax revenues? Explain whyExplanation / Answer
an indifference curve connects points on a graph representing different quantities of two goods, points between which a consumer is indifferent. That is, the consumer has no preference for one combination or bundle of goods over a different combination on the same curve. One can also refer to each point on the indifference curve as rendering the same level of utility (satisfaction) for the consumer. In other words, an indifference curve is the locus of various points showing different combinations of two goods providing equal utility to the consumer. Utility is then a device to represent preferences rather than something from which preferences come.[1] The main use of indifference curves is in the representation of potentially observable demand patterns for individual consumers over commodity bundles.[2]
There are infinitely many indifference curves: one passes through each combination. A collection of (selected) indifference curves, illustrated graphically, is referred to as an indifference map.