Question 1.) The city of country A is considering a policy to help raise money to finance a new civic center in a newly established south-eastern neighborhood. One policy option is to institute a payroll tax of $2.46 on wages, which is directly collected from workers by the government. The labor market demand is given by AD = 800,000 - 6,000w and the labor market supply is AS= ? 14,500w - 225,000
a.) Calculate the initial equilibrium labor market wage and employment level, graph this equilibrium with everything fully labeled, and determine employer, worker, and total surplus.
b.) Now calculate the "buyer" and "seller" prices and the new employment level under the policy, then graph this new equilibrium in a new fully-labeled figure, with all of the relevant "surplus areas" labeled with letters.
c.) Next, use the areas labeled with letters to calculate the changes in employer surplus, worker surplus, and total surplus, along with the government revenue, dead weight loss, and relative surplus burdens associated with this policy.
d.) Derive an expression for the new implicit labor market supply due to this policy.
Question 2.) Construct a realistic present value for your potential lifetime earnings over your entire working life. Begin with your age when you entered your first year of undergraduate education(age18, at the year of 2012), which will be treated as t is equal to 0, and end with your projected retirement year (age 65), which will be labeled as R.
Each parameter that goes into your present value calculation needs to be customized to fit your life. These components may include an interest and discount rate; any schooling costs; annual earnings at your completed schooling level, and in your selected occupation, industry, etc.; and how the earnings will change over time with on-the-job training. Please additionally incorporate at least one work relocation into your calculation. Then, calculate your present value of lifetime earnings. The calculation portion of your answer should be limited to one page.
Once you have done the calculation, briefly explain the origin of each component and why you have chosen it, along with every assumption being made, in essay form. Then, briefly explain whether you think your present value of lifetime earnings is a small or a large number relative to the average person and why you think that is so. This essay portion of your answer should be limited to two pages and in paragraph form, and it will be graded on its completeness and its originality.