(a) Why is one of the men lying in the dumpster?
1 answer:
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Answer:
A decrease in the size of a tax always decreases the deadweight loss of that tax.
Explanation:
Deadweight loss of tax is defined as the harm that is caused by tax to economic efficiency and prodction. It measures by how much taxes reduces the standard of living of a population.
Deadweight loss is the difference between to tax imposed and the reduction in production level it causes.
A decrease in the size of tax will give more income free to invest in production, therefore the production level will increase. This reduces the deadweight loss.
Effect of tax on deadweight is illustrated in the attached.
Answer:
Stated Rate No. of Times Compounded Effective Rate (EAR) %
11.85% Semiannually 12.2 %
12.37% Monthly 13.1%
110.27% Weekly 10.8%
13.54% Infinite 14.5%
Explanation:
EAR = ( 1 + ( APR / m )^m)-1
Semiannually
m = 12 / 6 = 2
0.1220 = ( ( 1 + ( APR / 2 ) )^2) - 1
0.1220 + 1 = (1 + ( APR / 2 ) )^2
1.1220 = ( 1 + ( APR / 2 ) )^2
=
1.059 = 1 + ( APR / 2 )
1.059 - 1 = APR / 2
0.059 x 2 = APR
APR = 0.1185 = 11.85%
Monthly
m = 12 / 1 = 12
0.1310 = ( ( 1 + ( APR / 12 ) )^12) - 1
0.1310 + 1 = (1 + ( APR / 12 ) )^12
1.1310 = ( 1 + ( APR / 12 ) )^12
APR = 12.37%
Weekly
m = 52
0.1080 = ( ( 1 + ( APR / 52 ) )^52) - 1
0.1080 + 1 = (1 + ( APR / 52 ) )^52
1.1080 = ( 1 + ( APR / 52 ) )^52
APR = 10.27%
Infinite
m = 20,000
0.1450 = ( ( 1 + ( APR / 12 ) )^12) - 1
0.1450 + 1 = (1 + ( APR / 12 ) )^12
1.1450 = ( 1 + ( APR / 20,000 ) )^20,000
APR = 13.54%