代写Public Economics Practice Problems - Final Exam代写Java编程

Public Economics

Practice Problems - Final Exam

Question 1. Suppose that your utility function is U=log(4X) where X is the amount of income

you make in a year. You typically make $30,000 per year, but there is a 5% chance that you will

get sick and lose $20,000 due to medical costs. Note: this is the natural log (LN on your calculator/excel).

a)  What is your expected utility if you do not have insurance to protect against this adverse event?

b)  Suppose you can buy insurance that covers your losses if you get sick. What would be the actuarially fair premium?

c)  What is your expected utility if you buy the insurance policy?

d)  What is the most you’dbe willing to pay for this policy?

Question 2. Suppose the government is considering two different tax policies:

Current policy

.    Each citizen receives $5,000 in cash up front in benefits

.    The first $10,000 in earned income is untaxed

.    All earned income over $10,000 taxed at a rate of 25%

Proposed new policy

.    Subsidize the first $10,000 in earned income at a 50% rate (like EITC benefits)

.    All income earned over $10,000 would still be taxed at the same 25% rate and the EITC benefits would never be phased out.

a)   Draw the budget constraints for the two policies labeling all slopes and axes.

b)  Consider an individual who earns a salary of $8,000. If the government switched from the current policy to the proposed policy

1.   The substitution effect from the policy change has the following effect on work:

2.   The income effect from the policy change has the following effect on work:

3.   The total effect on work is:

c)   Consider an individual who earns a salary of $80,000. If the government switched from the current policy to the proposed policy…(circle one answer)

1.   The substitution effect from the policy change has the following effect on work:

2.   The income effect from the policy change has the following effect on work:

3.   The total effect on work is:

Question 3. The demand for football tickets is Q = 360 - 10P and the supply of football tickets  is Q = 20P. The government levies a $4 tax per ticket on consumers. Calculate the prices below.

Consumer Price:

Producer Price:

Question 4. Consider the following supply and demand curves in a perfectly competitive market:

Pd=40-Qd

Ps=20

Find the equilibrium in this market after the introduction of a $5 tax on producers.

Consumer Price:

Producer Price:

Quantity:

Tax Revenue:

Question 5. Short Answer.

a)   The government is considering imposing taxes on the sellers of certain classes of

products. The first tax they are considering is a tax on 2% milk. The second is a tax on all dairy products. The third is a tax on all food products. Which of these three taxes would you expect to have the largest impact on the sticker prices of the taxed products?

b)  Name the economic term/concept associated with the graph below.

Question 6. Suppose you have a job with a wage of $25 per hour and you can work up to 2000 hours per year. The income tax system takes the following form.

.    Income up to $10,000: no tax

.    Income from $10,000-$30,000: 20% tax rate

.    Income from $30,000 up: 30% tax rate

Draw a graph in hours worked/consumption space, showing your opportunity set with and without the tax system.