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Describe the main differences between partial and general equilibrium analysis in the context of examining tax incidence.
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- (b) Discuss the distinction and similarities between partial and general equilibrium analysis.The demand and supply function for a good are respectively Q= a+bP+cI and Q =d+gPwhere Q is quantity, P is price and I is income. Comparative statics analysis with respect to income I can be conducted in two alternative ways: (i) Explicitly solve for Q and P as a function of I, and then derive dQ/dl and dP/dl; (ii) Directly differentiate the above two equations with respect to I while taking Q and P as functions of I, and then solve the resulting two equations for dQ/dl and dP/dl. (a) Calculate equilibrium quantity and price for this market as functions of the parameters a, b, c, d, g and I. (b) Use your results from part (a) to calculate the comparative statics derivatives dP/dl and dQ/dl. (c) Now calculate the same derivatives dP/dl and dQ/dl using the comparative statics analysis method (ii) described abovea) Suppose demand for good X is given by QD = 900- p/2 where p is the price and QD the quantity demanded. Supply is given by QS = p/4. Suppose 60 TL tax is imposed on each unit of X that is purchased. What is the burden of the tax? Explain the key factors that determine the incidence of the tax. b) Describe the main differences between partial and general equilibrium analysis in the context of examining tax incidence.
- The HO model is based on four key relationships: between factor prices andcommodity prices, between goods prices and outputs, between goods prices and factor returns, and lastly between factor endowments and outputs.Clearly Explain.a) Suppose demand for good X is given by QD = 900- p/2 where p is the price and QD the quantity demanded. Supply is given by QS = p/4. Suppose 60 TL tax is imposed on each unit ofX that is purchased. What is the burden of the tax? Explain the key factors that determine the incidence of the tax. b) Describe the main differences between partial and general equilibrium analysis in the context of examining tax incidence.Variables typically included in a multivariate supply function (other than the price and quantity of the item the supply function represents) are prices of other goods that use similar input resources for production, the number of suppliers, techniques of production, taxes and subsidies, prices of input resources, weather, and expectations. Please answer the following questions about the affect changes in other variables might have on the supply of the item. These changes will either cause supply to increase (shift right) or decrease (shift left). Use either word as applicable, for the short answer. 1. If the market price of gasoline returns to the near $4.00 per gallon level then demand for gas-gulping large autos is likely to decrease and manufacturers of these autos are likely to _____________ their supply: 2. A relative increase in the productivity of the technology used to produce the item being considered is likely to _____________________ its supply. 3. Hailstorms have pelted…
- What are the shortcomings of the grossman modelBased on the model of demand and supply, the demand and supply functions are given at the following equations: P = 4QS QD = 500 – P Where: QS is the number of packs of cigarettes offered for sale; QD is the number of packs of cigarettes purchased on the market, P is the price of pack of cigarettes. Find the equilibrium price and the number of packs of cigarettes at market equilibrium. To reduce cigarette consumption, the state has set a minimum price of P=15. Determine the size of the imbalance at this price.Explain the concept of Internal and External Validity in relation to statistical analysis?
- Would the assumption that goods are perfect substitutes be valid in a study of intertemporal food purchases? Explain with graphic.Please label which part of the question (a, b, or c) that you are answering. This question asks you to perform a comparative statics analysis in the market for hot chocolate. The following diagram depicts the market for hot chocolate. P Q SI3.1 Yell-O Yew-Boats, Ltd. produces a popular brand of pointy birds called Blue Meanies. Consider the demand and supply equations for Blue Meanies: QD. = 150 – 2P, +0.0011+1.5P, Qs.x = 60+4P, - 2.5W where Q, = monthly per-family consumption of Blue Meanies P = price per unit of Blue Meanies I = median annual per-family income = $25,000 P, = price per unit of Apple Bonkers = $5.00 W = hourly per-worker wage rate = $8.60 a. What type of good is an Apple Bonker? b. What are the equilibrium price and quantity of Blue Meanies? c. Suppose that median per-family income increases by $6,000. What are the new equilibrium price and quantity of Blue Meanies? d. Suppose that in addition to the increase in median per-family ncome, collective bargaining by Blue Meanie Local #666 resulted in CHAPTER EXERCISES 143 a $2.40 hourly increase in the wage rate. What are the new equilib rium price and quantity? e. In a single diagram, illustrate your answers to parts b, c, and d.