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sveticcg [70]
3 years ago
13

Suppose Congress is considering raising the top federal marginal tax rate from 35% to 40%. Senator Jones believes the elasticity

of taxable income is large. Senator Smith believes the elasticity of taxable income is small. (Both believe the elasticity is positive.) The Congressional Budget Office estimates the effects of the tax proposal using each Senator's assumptions. (i) Will the estimates of additional revenue from the tax increase be larger or smaller under Senator Jones's assumptions, compared to Senator Smith's assumptions? (ii) What about estimates of the efficiency costs of the tax increase: which set of assumptions leads to the higher estimate?
Business
1 answer:
KIM [24]3 years ago
3 0

Answer:

Explanation:

Solution-

According to Senator Jones, the elasticity of taxable income is larger, which means that due to a certain percentage rise in taxes, the taxable income rises by a greater percentage. Also, according to Senator Smith, the elasticity of taxable income is small, which means that due to a certain percentage rise in taxes, the taxable income rises by a smaller percentage.

(I) Under Senator Jones assumptions, due to rise in taxes, the taxable income has risen considerably as compared to Senator Smith assumptions. Thus the estimates of additional revenue from the tax increase will be larger under Senator Jones assumptions, compared to Smith's assumptions.

(ii) Since under Senator Jones assumptions, elasticity of taxable income is large. So due to rise in taxes, there is a significant proportional rise in taxable income under Jone's assumptions compared to Senator Smith assumptions. Thus the costs of the tax increase is borne more under Senator Jones assumptions , compared to Smith's assumptions.

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Why is it more difficult to get out of debt when only paying the minimum payment?
Artyom0805 [142]

When one keeps paying only the minimum amount, they will find getting out of debt harder because:

  • More interest will accrue on the balance left

When a person pays the minimum balance that they are supposed to pay on a loan, they will be leaving a larger portion of money to be paid back.

This amount will accumulate interest such that the debt will keep increasing because the interest needs to be paid back as well.

In order to get out of debt faster, it is recommended that you pay higher than the minimum because this would reduce the amount that interest is charged on which means that you would owe less interest.

In conclusion, paying the minimum balance leads to more interest accumulating which makes getting out of debt difficult.

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How does specialization affect an economy more efficient?
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At a price of $0.50, how many more or fewer cups of lemonade do caroline and emily sell when the temperature is 60 degrees than
djverab [1.8K]

At a price of $0.50, the amount of cups of lemonade that Caroline and Emily sell when the temperature is 60 degrees than when the temperature is 80 degrees is <u>-</u><u>1</u><u>5</u>.

50 - 80 = -30

= -30 * 0.5

= - 15

<h3>How does one arrive at the answer?</h3>

This is an instance of demand curve shift which refers to key changes in the balance of supply and demand that alter the quantity demanded at the same price. Hence, the shift in the quantity demanded will affect the amount of cups of lemonade that is sold.

Sometimes questions that involve graphs will ask you to consider the effect of a changing factor or factors. Problem statement: the line labeled D1 in the graph to the right shows the number of cups of lemonade that Caroline and Emily can sell at their lemonade stand at various prices.

Caroline and Emily have noticed that they sell more lemonade when it's hotter. Click anywhere on the graph to open a window with a control labeled Temperature. If you use the slider to change the temperature, the line will shift. Change the temperature from 80 degrees to 50 degrees.

At a price of $0.50, the amount of cups of lemonade that Caroline and Emily sell when the temperature is 60 degrees than when the temperature is 80 degrees is<u> -15</u>.

Therefore, the correct answer is as given above

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