Taxation leads to market failure since it increases the prices of taxed commodities thereby reducing the quantity demanded in the market. At equilibrium less is demanded, the tax prevents the interaction among buyers and sellers form automatically equating marginal social benefit and marginal social cost required to attain efficiency.
Faimus answered the question on February 25, 2019 at 18:57
-
What is meant by asymmetric information?
(Solved)
What is meant by asymmetric information?
Date posted:
February 25, 2019
.
Answers (1)
-
In what cases do the positive and negative externalities occur?
(Solved)
In what cases do the positive and negative externalities occur?
Date posted:
February 25, 2019
.
Answers (1)
-
What are the disadvantages of the paternalistic role of the government
(Solved)
What are the disadvantages of the paternalistic role of the government
Date posted:
February 25, 2019
.
Answers (1)
-
Define the paternalistic role of the government and briefly define some of its advantages
(Solved)
Define the paternalistic role of the government and briefly define some of its advantages
Date posted:
February 25, 2019
.
Answers (1)
-
Define any three sources of market failure
(Solved)
Define any three sources of market failure
Date posted:
February 25, 2019
.
Answers (1)
-
Consider the following data Date Exchange rate January 2017 EURUSD 1.100 December 2017 EURUSD 1.144 Take USD as the home currency.
(Solved)
a) Consider the following data
Date-----Exchange rate
January 2017----EURUSD 1.100
December 2017----EURUSD 1.144
Take USD as the home currency.
According to purchasing power parity which currency area should have had the higher rate of inflation by 2017 and by how much?
b) If inflation in the USD were 3% higher than the EURO area, calculate the change in the real value of the dollar .what is the implication of this change?
C) What is the implication of a change in real exchange rate of a currency?
d)
Explain why you would expect interest rates in the US to be higher than in the EURO area.
e) Explain why you would expect there to be no difference in the interest rates of a government bond of any two countries in the euro area and also explain why in practice there are differences.
Date posted:
February 16, 2019
.
Answers (1)
-
a) Calculate to 4 decimal place the new exchange rate after a 2% increase in the value of the dollar given an exchange rate of...
(Solved)
a) Calculate to 4 decimal place the new exchange rate after a 2% increase in the value of the dollar given an exchange rate of EURUSD 1.1 .
b) Given the following exchange rate, calculate the GBPEUR rate to 4 decimal places.
EURUSD 1.1043
GBPUSD 1.2970
c) Explain the relationship between your answer above and triangular arbitrage.
Date posted:
February 16, 2019
.
Answers (1)
-
Discuss five different types of elasticity of supply.
(Solved)
Different types of elasticity with examples.
Date posted:
February 14, 2019
.
Answers (1)
-
Give any three factors that limit the level of liquidity preference
(Solved)
Give any three factors that limit the level of liquidity preference
Date posted:
January 24, 2019
.
Answers (1)
-
State and explain the branches of economics
(Solved)
State and explain the branches of economics.
Date posted:
January 21, 2019
.
Answers (1)
-
Explain the ways in which the income elasticity of demand coefficient is interpreted
(Solved)
Explain the ways in which the income elasticity of demand coefficient is interpreted
Date posted:
January 16, 2019
.
Answers (1)
-
What is income elasticity of demand?
(Solved)
What is income elasticity of demand?
Date posted:
January 16, 2019
.
Answers (1)
-
Price elasticity of demand coefficient can be interpreted in several ways. Briefly explain them.
(Solved)
Price elasticity of demand coefficient can be interpreted in several ways. Briefly explain them.
Date posted:
January 16, 2019
.
Answers (1)
-
Differentiate between point and arc elasticity of demand.
(Solved)
Differentiate between point and arc elasticity of demand.
Date posted:
January 16, 2019
.
Answers (1)
-
What is the usefulness of the concept of elasticity in economics?
(Solved)
What is the usefulness of the concept of elasticity in economics?
Date posted:
January 16, 2019
.
Answers (1)
-
Highlight and explain the determinants of elasticity of supply
(Solved)
Highlight and explain the determinants of elasticity of supply
Date posted:
January 16, 2019
.
Answers (1)
-
Highlight the determinants of price elasticity of demand
(Solved)
Highlight the determinants of price elasticity of demand
Date posted:
January 16, 2019
.
Answers (1)
-
Give the consequences of minimum price policy by the government
(Solved)
Give the consequences of minimum price policy by the government
Date posted:
January 16, 2019
.
Answers (1)
-
Give any conditions for disequilibrium of demand and supply.
(Solved)
Give any conditions for disequilibrium of demand and supply.
Date posted:
January 16, 2019
.
Answers (1)
-
What is the equilibrium of supply and demand?
(Solved)
What is the equilibrium of supply and demand?
Date posted:
January 16, 2019
.
Answers (1)