Answer:
MPC = 0.4
Explanation:
Multiplier shows change in income due to change (increase) in investment, or change (decrease) in tax. It is calculated by Marginal Propensity to Consume, as follows -
Multiplier ie k = Δ Income / Δ (govt investment or tax) = 1 / (1 - MPC)
Given : ΔG ie tax fall = 60 ; Targeted income rise = Full employment - actual output = 2000 - 1900 = 100
k = ΔY / ΔG = 100 / 60 = 1.67
k = 1 / (1 - MPC) → 1 - MPC = 1 / k → 1 - MPC = 1 / 1.67 → 1 - MPC = 0.6
MPC = 1 - 0.6 → MPC = 0.4
Answer:
$21.67
Explanation:
Exhibit 21-3 is attached with the answer .Please find it.
Total cost of production includes the fixed cost and variable cost. Fixed Cost remains constant as $500 in the exhibit, but the variable cost changes with each production level.
Cost of producing 60 units
Variable cost = $800
Fixed cost = $500
Total cost = $800+500 = $1,300
Product cost per unit = Total cost / numbers of unit = $1,300 / 60 = $21.67
Answer:
PV(after-tax net return in 7th year) = 70.55 (Approx)
Explanation:
Given:
Number of year = 7
Pre-tax net returns (Fn) = $100
Growth rate = 4% = 0.04
Inflation = 3% = 0.03
Marginal tax rate = 30% = 0.3
Discount rate = 10% = 0.1
Computation:
Fn = Fo(1+g)ⁿ = 100(1.04)⁷
Fn = 131.6
Nominal net returns = 131.6(1.03)⁷
Nominal net returns = 161.85
After tax return = 161.85 (1 - 0.3)
After tax return = 113.30
After-tax, risk adjusted discount rate = 0.1(1-0.3) = 7%
PV(after-tax net return in 7th year) = 113.30
(1+0.07)⁻⁷
PV(after-tax net return in 7th year) = 70.55 (Approx)
Answer:
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