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Unformatted text preview: Take-Home Midterm ODD-EVEN-EVEN 1 Take-Home Midterm ODD-EVEN-EVEN This exam is take-home, open-book, open-notes. You may consult any published source (cite your references). Other people are closed. The exam you turn in should be your own personal work. Do not discuss with classmates, friends, professors (except with Prof. Starr or Ms. Fried — who promise to be clueless), until the examination is collected. 1 Consider the general competitive equilibrium of a production economy with corporate income taxation. In addition to the prices of goods p ∈ P , there is a (scalar) corporate tax rate τ , 1 > τ > 0. Proceeds of the tax are then distributed to households as a lump sum. Household income then is M i ( p ) = p · r i + bracketleftBig ∑ j ∈ F α ij (1- τ ) p · S j ( p ) bracketrightBig + T, where T is the transfer of tax revenues to the household. The transfer to the typical household is T = 1 # H ∑ j ∈ F τ ( p · S j ( p )) ....
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This note was uploaded on 11/30/2011 for the course ECON 311 taught by Professor Zambrano during the Fall '08 term at Cal Poly.
- Fall '08