Série d'exercices d'économie appliquée niveau master
[...] There is a net benefit to the government in raising taxes, though not by the same amount Equilibrium and elasticities - continued If the government subsidises the producer price by 20% this means that prices decrease by: 20%*0.8 = 16%. A decline in prices boosts demand, so the increase in demand would be equal to: 16%*0.4 = 6.4% In total, the consumer price would decrease by and demand quantity would increase by Supply-demand exercise Because supply has a zero elasticity in the short run, prices do not change. Quantities decline by half because of the nuclear shutdown. [...]
[...] We know that in competitive markets, firms equate prices to the marginal cost, namely : p = jcq. Which means that each firm supplies the following : Total supply would thus write :QJs=p1jc 2. Equilibrium and elasticities There is a tax on tobacco equal to 30% of the price payable by produces. The tax is increased by 10 percentage point. If the elasticity demand is -0.45, that means that demand for tobacco should decrease by 4.5%. A 10 point increase in the tax means that it represents now 40% of the price. [...]
[...] Because of demand elasticity of -0.4, quantity decreases by -0.4*35% = 14%. There is a 14% fall in demanded quantities Technological change exercise The firm has constant returns to scale technology It means that tY=f(tL,tI) where t is a scale parameter. Labour accounts for 50% of total cost. If wages increase by and intermediate inputs increase by then its total cost increases by = (since labour accounts for half the total cost, other intermediate inputs, the other half due to constant returns to scale). [...]
[...] The marginal cost function derives the total cost function, and writes : MC(q,j)=jcq. Firm 1 exhibits the following AC/MC : AC(q,1)=FC/q+0.5cq, and MC(q,1)=0.5cq while Firm 10 writes : AC(q,10)=FC/q+5cq and MC(q,10)=5cq. We can see that AC(q,1) [...]
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