Question

In: Economics

a) Suppose that the government plans to impose a tax on labour employed as an input...

  1. a) Suppose that the government plans to impose a tax on labour employed as an input in agriculture. Consider agriculture as a highly labour-intensive sector and discuss the possible effects of the tax, using the general equilibrium framework.

    b) Suppose that the government of your province has decided to provide a housing subsidy for low-income families of the province to raise their standard of living. The government has also decided to impose an income tax on workers (employees) to generate funds for the subsidy. Analyze the welfare effects of this decision. What are the suggestions you can make to minimize any negative welfare costs?

Solutions

Expert Solution

a) Suppose that the government plans to impose a tax on labour employed as an input in agriculture. Consider agriculture as a highly labour-intensive sector and discuss the possible effects of the tax, using the general equilibrium framework. (2 marks)

If the govt impose the tax on the labour which were suppopsed to employed in the agroiculture , it will have a negative impact on the labour market and it will decrease the demand of the labour in the sector .This will have a drop down decrease in the total output of the agriculture sector .

b) Suppose that the government of your province has decided to provide a housing subsidy for low-income families of the province to raise their standard of living. The government has also decided to impose an income tax on workers (employees) to generate funds for the subsidy. Analyze the welfare effects of this decision. What are the suggestions you can make to minimize any negative welfare costs?

Answer

Yes , the imposition of tax here is a good decision by the govt as it will lead to a better infrastructure , those who could not afford the homes can purchase the house at subsidized rate and it will also boost the economy because of the sales .On the other hand the emlpoyer will have a little reduction on thier income but as a welfare , it will have a psoitive effect .ON THE WELFARE OF THE SOCIETY  

HAVE A GOOD DAY !

Rahul Sunny answered 8 months ago
Next > < Previous

Related Solutions

a) Suppose that the government plans to impose a tax on labour employed as an input...
a) Suppose that the government plans to impose a tax on labour employed as an input in agriculture. Consider agriculture as a highly labour-intensive sector and discuss the possible effects of the tax, using the general equilibrium framework. b) Suppose that the government of your province has decided to provide a housing subsidy for low-income families of the province to raise their standard of living. The government has also decided to impose an income tax on workers (employees) to generate...
Suppose that in the market for coffee, the government decides to impose a tax on the...
Suppose that in the market for coffee, the government decides to impose a tax on the consumption of coffee. Illustrate the equilibrium market for coffee reflecting the new tax. On your graph, label the new price that consumers pay as Pc On your graph, label the new price that sellers receive as Ps On your graph, shade in the area representing the tax revenue received by the government and label it (TR). On your graph, shade in the area of...
32. Suppose that in the market for coffee, the government decides to impose a tax on...
32. Suppose that in the market for coffee, the government decides to impose a tax on the consumption of coffee. a. Illustrate the equilibrium market for coffee reflecting the new tax. b. On your graph, label the new price that consumers pay as Pc c. On your graph, label the new price that sellers receive as Ps d. On your graph, shade in the area representing the tax revenue received by the government and label it (TR). e. On your...
Suppose that the government of China decided to impose a per unit tax on the suppliers...
Suppose that the government of China decided to impose a per unit tax on the suppliers of salt. a. Using a supply and demand model, show and explain the impact that the per-unit tax had on the equilibrium price and quantity of salt. b. Using the diagram created for your answer to (a), show and explain what effect the per unit tax had on consumer surplus, producer surplus and deadweight loss. c. List three reasons a government may impose a...
7. Suppose that the government impose a tax of $1 on the production of Nikes (Jordans)....
7. Suppose that the government impose a tax of $1 on the production of Nikes (Jordans). At the same time Nikes and Reeboks are substitutes and the price of Reeboks decrease. What happens to equilibrium price and quantity? Illustrate using a graph. 8. Assume that producers expect the price of orange juice to be lower in December. At the same time a new study just released states that drinking more orange juice will increase your chance of not getting cancer....
Assume that the government decides to impose a tax on sellers of foods that are high...
Assume that the government decides to impose a tax on sellers of foods that are high in sugar content. a) Using a demand and supply diagram (half an A4 page), demonstrate and explain how such a tax that is imposed on sellers in fact creates a burden on consumers as well. Indicate the government revenue on your diagram. b) What is price elasticity of demand and how is it calculated? Briefly explain using diagrams, how price elasticity of demand will...
The government decided to impose a tax of NIS 10 per unit on the manufacturers of...
The government decided to impose a tax of NIS 10 per unit on the manufacturers of clothing goods, which until now were exempt from taxes. a.     In a graph analyze and present the effect of this step taken by the government on quantity produced of clothing goods, on the price paid by consumers and on the price received by the manufacturer. In a graph (diagram) show the government receipts and the deadweight loss. b.     Will your answer to (a) above...
Should government impose tax on vice activities (tobacco,alcohol)? Discuss.
Should government impose tax on vice activities (tobacco,alcohol)? Discuss.
If the government decides to impose a tax of 20 cents per litre on petrol, illustrate...
If the government decides to impose a tax of 20 cents per litre on petrol, illustrate the impact of the tax on market equilibrium price, and discuss whether the outcome is efficient by demonstrating the change of consumer’s and producer’s surplus as a result of the tax. •Draw a demand and supply model, with demand curve. •Show the shift of S as a result of 20 cent tax. •Identify new equilibrium. •Mark the price paid by consumer and received by...
The government impose a 20%tax on the sale of milk. Given that Sam has an income...
The government impose a 20%tax on the sale of milk. Given that Sam has an income of 100 pennies, the price of milk is 5 pennies, the price of bread is 4 pennies, and Sam's utility function is U=(M)2/3(B)1/3. The tax on milk is a burden on Sam, how much of a burden is it? calculate the increase in income require to compensate Sam for the imposition of the tax. How does that compare to the money raised from the...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT