Question

In: Economics

14.When supply and demand are linear curves, the incidence of the tax is always split equally...

14.When supply and demand are linear curves, the incidence of the tax is always split equally between producers and consumers.

A.True

B.False

15.Valuing the loss of a non-market good due to pollution requires methods of imputing the marginal willingness to pay for damage reduction/environmental quality improvement because market prices do not exist.

A.False

B.True

16.An environmental program is ________ if the net effect of that policy has proportionally ________ effect on low-income people as on high-income people.

A.progressive; less

B.progressive; greater

C.regressive; greater

D.progressive; the same

17. The ________ is a weighted average equal to the sum over all possible events of each outcome times the ________ of each outcome.

A.present value; discount factor

B.expected value; probability of occurrence

C.present value; probability of occurrence

D.expected value; discount factor

19.If the inverse demand curve is: P = 50 - 2Q_D, the consumer surplus at 10 units of consumption is _______.

A.$100

B.$220

C.$30

D.$140

Solutions

Expert Solution

14) False..

(The incidence of the tax is depends upon the elasticity of the supply and demand curve)..

15) True..

(Valuing the loss of a non-market good due to pollution requires methods of imputing the marginal willingness to pay for damage reduction/environmental quality improvement because market prices do not exist)..

16) Progressive; greater..

(An environmental program is progressive if the net effect of that policy has proportionally greater effect on low-income people as on high-income people)..

17) expected value; probability of occurrence..

(the expected value is calculated by multiplying each of the possible outcomes by the probability of each outcome)..

19) Consumer surplus = ∫q0 f(q)dq−pq

(where q=10, f(q)=50-2q, p= 50-2*10= 50-20 =30)..

Now, integration f(q)dq = integration (50-2q)dq = 50q- q^2

= 50*10-10^2 (using upper limit 10 and lower limit 0)

=500-100 =400..

So, Consumer surplus = 400-pq =400-30*10 =400-300 =$100..

(Please give an up vote if you find it helpful)..

Rahul Sunny answered 5 months ago

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