Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Macroeconomics Expert

problem1.  You are a commuter student at local university. Because of the steep ascend in gasoline prices, your parents decide to give you adequate additional weekly cash so that you can afford the higher transportation expenses with no having to reduce your spending on anything else. 

True or False, elucidate (using indifference curve analysis): Because of your parents’ generosity, your standard of living, that is, welfare will be unaffected by the increase in gasoline prices.  (HINT: Think of the additional cash from your parents as a “cost-of-living adjustment”.) 

problem2. Using a graph of the compensated and uncompensated demand curves, show how the magnitudes of the CV, EV, and CS will be related to each other when there is a ceteris paribus increase in the price of an inferior good. 

problem3.

a. Usually, there will be a difference between the CV and the EV.  Why? 

b. The change in consumer surplus (CS) is not “theoretically” justifiable like the CV and EV but it continues to be the most widely used measure of consumer welfare change.  describe how this can be reconciled.

problem4. Use standard indifference curve analysis to show whether the following statement is true or false. 

If the aim of government welfare programs is to offer lower income households with a specific minimum level of economic well-being, then it will be cheaper to do so throughout a system of pure cash transfers than through a system of price subsidies. 

problem5. Carmen, the Queen of Electra, is concerned over what she thinks is an excessive consumption of electricity. Therefore, she proposes an excise tax onto electricity consumption which, if implemented, would add $500 per year to the taxes of the average Electran household. An advisor to the Queen warns of a consumer backlash and recommends the following amendment give the $500 back in the form of a tax rebate.  The Queen thinks this is the dumbest idea she’s ever heard.  She reasons that such a plan would do nothing to reduce electricity consumption because the plan would take away $500 with one hand, but give it back with the other.     

Do you agree with the Queen or not?  Fully elucidate your answer using standard indifference curve analysis.

Macroeconomics, Economics

  • Category:- Macroeconomics
  • Reference No.:- M91582

Have any Question? 


Related Questions in Macroeconomics

A large country named h is considering an export subsidy to

A large country named H is considering an export subsidy to promote the industry that produces good X. The country's excess supply curve is P=2000+2X. The world's excess demand curve is P=5000-10X. a.) What is the equili ...

1 1.

1. Describe three factors that help to influence our nation's focus on natural or man-made disasters. 2. Define Mitigation and Preparedness. Compare and contrast the ideas of each, and give examples to highlight your sta ...

Would need in an hoursuppose the marginal social cost of

Would need in an hour. Suppose the marginal social cost of providing health care to a person is given by the equation 20+4Q. An individual's marginal benefit of health care is 300-Q. This individual has an insurance poli ...

Assignment lasa supply and demand in a global marketanswer

Assignment: LASA: Supply and Demand in a Global Market Answer the following questions using examples and applications from the readings. Justify your answers using economic concepts and ideas as they apply. Each response ...

Using an is-lm model under a flexible exchange rate regime

Using an IS-LM model, under a flexible exchange rate regime, show how the domestic economy reacts to a decrease in foreign income. Is there a real response in the economy in terms of output levels?

Profit maximizing input demandconsider a competitive firm

[Profit maximizing input demand] Consider a competitive firm with the following profit functionΠ = R-C = PQ-wL-rK,whereP = Price of the outputQ = OutputL = Labor inputK = Capital inputw = wage rate for labor inputr = ren ...

Suppose a big mac costs 500 in the united states and 25

Suppose a Big Mac costs $5.00 in the United States and 25 Chinese yuan in China. If the exchange rate is 6.9 Chinese yuan per dollar, purchasing power parity predicts A. the yuan is undervalued. B. the dollar is underval ...

Pice discriminationassume that there is a single monopoly

Price Discrimination Assume that there is a single monopoly supplier of gadgets, but there are two distinct types of consumers, with the following individual demand curves: Type α: qα = 100 - 2pα Type β: qβ = 80 - 3pβ Th ...

Consider the following bayesian game player 1 can be of two

Consider the following Bayesian game: player 1 can be of two types (determined by "Nature") -Reliable (R) with probability "x" or Unreliable (U) with probability "1-x". These probabilities areknown to both players. Playe ...

Assume an economy that is operating above full

Assume an economy that is operating above full employment. Draw a correctly labeled aggregate demand and aggregate supply graph and show each of the following: The long-run aggregate supply curve Current price level and ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro