Consider a case where the initial price of a pack of cigarette is $1.50 per pack and the quantity sold and bought is 200,000 packs per day. Assuming an elasticity of demand of -0.85 and elasticity of supply of 2.5,

1. Calculate the tax revenue and excess burden if the excise tax on each pack of cigarette is $1.50.
2. Suppose the elasticity of demand is -0.45 and the elasticity of supply is 1.05, what is the incidence of the tax on (i) the consumers (ii) the producer
3. What is the new tax revenue and excess burden?

Due to the corona virus pandemic there has been a decrease in the demand for luxury goods especially in the airline industry where revenue has decreased,  a decrease in consumer income and factories have closed due to the virus causing a supply shortage to companies such as Apple and Toyota. Fully Explain this change using elasticity measurements and determinants (price elasticity and its relationship to revenue, price elasticity of supply and income elasticity of demand . Provide graphs and calculations to support your explanation.

In addition to its regular license plate, the state of Texas sells personalized “vanity” licenses for additional fees. When the State increased the price for such plates $25 to $75, the number of people who ordered vanity plates dropped from 150,000 to 60,000

(a) Calculate the price elasticity for the vanity plate. Is it elastic?

(b) Assume the main objective of Texan government is to maximize the revenue of the state, what is the optimum price to charge to the vanity plate? What is the total revenue at that price?

The firm, competing in a very highly competitive market, is manufacturing and selling headphones. The firm’s total revenue and cost functions are:

Rq=q3+14q2+35q+40

Cq=13q3+20q2+19q+15

1. How many headphones must the firm manufacture and sell to maximize profits?
2. What will be the price the firm must charge to its customers to maximize profits?
3. What will be the average revenue generated for each unit sold and what will be the average cost of producing a headphone?

At $80 , a firm can sell 4,715 stereo earphones (3.5 mm for android). At this price, elasticity is estimated at 2.2. What is the change in total revenue (+ or -) if the firm drops price by 12%? Round your answer to the nearest dollar.

At $171, a firm can sell 19,195 stereo earphones (3.5 mm for android). These are premium earphones, guaranteed for 5 years. At this price, elasticity is estimated at 0.4. What is the change in total revenue (+ or -) if the firm drops price by 10%?

1. Tax disclosures and strategies: Examine the income tax expense and deferred tax assets and liabilities.

a)      Determine the amount of tax expense on the income statement and distinguish between current and deferred portions.

b)      Assess the company’s effective tax rate, is it consistent? If not, do the fluctuations seem reasonable?

c)      Do the deferred tax assets and liabilities seem appropriate given the company’s industry?

d)      Is there a valuation allowance? How big is it relative to total deferred tax assets? Has the valuation allowance changed markedly during the year? This might indicate income shifting.

1. Problems and Applications Q1

A publisher faces the following demand schedule for the next novel from one of its popular authors:

The author is paid $800,000 to write the novel, and the marginal cost of publishing the novel is a constant $4 per copy.

Complete the second, fourth, and fifth columns of the following table by computing total revenue, total cost, and profit at each quantity.

Which of the following quantity–price combinations would a profit-maximizing publisher choose? (Note: If the publisher is indifferent between more than one choice, select all of the indifferent combinations.) Check all that apply.

150,000 copies at a price of $28

200,000 copies at a price of $24

250,000 copies at a price of $20

300,000 copies at a price of $16

Complete the third column of the previous table by computing marginal revenue. (Hint: Recall that MR=ΔTRΔQMR=ΔTRΔQ.)

True or False: At each quantity, marginal revenue is less than the price.

True

False

Use the black points (plus symbol) to graph the marginal revenue from the 50,000th, 100,000th, 150,000th, 200,000th, 250,000th, and 300,000th copy of the novel. Remember to plot from left to right and to plot between integers. For example, if the marginal revenue of increasing production from 50,000 copies to 100,000 copies were 10, then you would plot a point at (75, 10). Next use the orange line (square symbol) to graph the marginal-cost curve faced by the publisher. Finally, use the blue points (circle symbol) to graph demand at the following quantities (in thousands): 0, 50, 100, 150, 200, 250, 300, 350, 400, 450, and 500.

Marginal RevenueMarginal CostDemandDeadweight Loss0501001502002503003504004505004036322824201612840-4PriceQuantity (Thousands of copies)200, 24Y-Intercept: 4Slope: 0

The marginal-revenue and marginal-cost curves intersect at a quantity of   copies.

On the previous graph, use the black triangle (plus symbols) to shade the area representing deadweight loss.

If the author were paid $1 million instead of $800,000 to write the book, the publisher would   the price it charges for a copy of the novel.

Suppose the publisher was not profit-maximizing but was concerned with maximizing economic efficiency, and the author of a novel was paid $800,000 to write the book.

In this case, the publisher would charge

for a copy of the novel and earn a profit of

. (Note: If the publisher experiences a loss, be sure to enter a negative number for profit.)

COUNTRYSIDE PAINTING SPECIALISTS Trial Balance November 30, 2018 Account Title Balance Debit Credit Cash $ 12,100 Accounts Receivable 1,300 Office Supplies 200 Painting Equipment 13,500 Accounts Payable $ 3,300 Unearned Revenue 1,700 Common Stock 15,000 Dividends 3,500 Service Revenue 15,600 Advertising Expense 550 Rent Expense 1,800 Salaries Expense 2,400 Utilities Expense 250 Total $ 35,600 $ 35,600 P2-29A Requirement 1 Date Accounts and Explanation Post Ref. Debit Credit July 1 Cash 63,000 Common Stock 63,000 5 Rent Expense 510 Cash 510 9 Land 23,000 Cash 23,000 10 Office Supplies 1,600 Accounts Payable 1,600 19 Cash 22,000 Notes Payable 22,000 22 Accounts Payable 1,100 Cash 1,100 28 Advertising Expense 240 Advertising Payable 240 31 Cash 6,400 Accounts Receivable 6,000 Service Revenue 12,400 31 Salaries Expense 2,200 Rent Expense 1,900 Utilities Expense 560 Cash 4,660 31 Cash 1,120 Unearned Revenue 1,120 31 Dividends 7,200 Cash 7,200 Requirement 2 Cash Accounts Payable Jul. 1 63,000 510 Jul. 5 Jul. 22 1,100 1,600 Jul. 10 Jul. 19 22,000 23,000 Jul. 9 500 Bal. Jul. 31 6,400 1,100 Jul. 22 Jul. 31 1,120 4,660 Jul. 31 Advertising Payable 7,200 Jul. 31 240 Jul. 28 Bal. 56,050 240 Bal. Accounts Receivable Unearned Revenue Jul. 31 6,000 1,120 Jul. 31 Bal. 6,000 1,120 Bal. Office Supplies Notes Payable Jul. 10 1,600 22,000 Jul. 19 Bal. 1,600 22,000 Bal. Land Common Stock Jul. 9 23,000 63,000 Jul. 1 Bal. 23,000 63,000 Bal. Dividends Jul. 31 7,200 Bal. 7,200 Service Revenue 12,400 Jul. 31 12,400 Bal. Salaries Expense Jul. 31 2,200 Bal. 2,200 Rent Expense Jul. 5 510 Jul. 31 1,900 Bal. 2,410 Utilities Expense Jul. 31 560 Bal. 560 Advertising Expense Jul. 28 240 Bal. 240 Requirement 3 VINCE YORK, MD Trial Balance July 31, 2018 Account Title Balance Debit Credit Cash $ 56,050 Accounts Receivable 6,000 Office Supplies 1,600 Land 23,000 Accounts Payable $ 500 Advertising Payable 240 Unearned Revenue 1,120 Notes Payable 22,000 Common Stock 63,000 Dividends 7,200 Service Revenue 12,400 Salaries Expense 2,200 Rent Expense 2,410 Utilities Expense 560 Advertising Expense 240 Total $ 99,260 $ 99,260

The following information relates to Hudson City for its fiscal year ended December 31, 2017. During the year, retailers in the city collected $1,700,000 in sales taxes owed to the city. As of December 31, retailers have remitted $1,100,000, $200,000 is expected in January 2018, and the remaining $400,000 is expected in April 2018. On December 31, 2016, the Foundation for the Arts pledged to donate $1, up to a maximum of $1 million, for each $3 that the museum is able to collect from other private contributors. The funds are to finance construction of the city-owned art museum. During 2017, the city collected $600,000 and received the matching money from the Foundation. In January and February 2018, it collected an additional $2,400,000 and also received the matching money. During the year the city imposed license fees on street vendors. All vendors were required to purchase the licenses by September 30, 2017. The licenses cover the one-year period from October 1, 2017, through September 30, 2018. During 2017 the city collected $240,000 in license fees. The city sold a fire truck for $40,000 that it had acquired five years earlier for $250,000. At the time of sale the city had charged $225,000 in depreciation. The city received a grant of $2 million to partially reimburse costs of training police officers. During the year the city incurred $1,500,000 of allowable costs and received $1,200,000. It expects to incur an additional $500,000 in allowable costs in January 2048 and to be reimbursed for all allowable costs by the end of February 2018. Refer to the two lists that follow. Select the appropriate amounts from the lettered list for each item in the numbered list. An amount may be selected once, more than once, or not at all.

Amount of sales tax revenue that the city should recognize in its funds statements

Amount of sales tax revenue the city should recognize as revenue in government-wide statements

Increase in deferred inflows in funds statements from sales tax revenues not yet received

Contribution revenue from Foundation for the Arts to be recognized in funds statements

Contribution revenue from Foundation for the Arts to be recognized in government-wide statements

Revenue from license fees to be recognized in funds statements

Increase in general fund balance owing to sale of fire engine

Increase in net position (government-wide statements) owing to sale of fire engine

Revenue in fund statements from police training grant

Revenue in government-wide statements from police training grant

PLEASE INLCUDE COMPUTATIONS FOR ANSWERS GIVEN!

Answer Choices

a. $0 m. $1,000,000

b. $1,500 n. $1,200,000

c. $15,000 o. $1,300,000

d. $30,000 p. $1,500,000

e. $40,000 q. $1,700,000

f. $60,000 r. $2,000,000

g. $200,000

h. $225,000

i. $240,000

j. $400,000

PLEASE INLCUDE COMPUTATIONS FOR ANSWERS GIVEN!