Economics 309
Problem Set 2
1. Public Goods Game considered in class: 10 players each play ten rounds. In each round, $1 is
contributed by the experimenter to each players private account. In each round, each player
can contribute up to $1 to a public acc
Economics 309
Practice Exam Questions
1. According to the text,
A. the Head Start program for disadvantaged youngsters has failed to bring about improvements
in schooling attainment.
B. Poverty measures based on annual income suggest more inequality than
Economics 309
Problem Set 1
Winter 2012
1. Suppose that two consumers have utility functions U1 = x11/3 y12/3, U2 = x22/3 y21/3.
Suppose further that x1 + x2 = 8 and y1 + y2 = 10 represent the total amounts of the goods
available. A) Find the contract cur
#3) Assume that a person can work (or leisure) at most 16 hours per day times 30 days per
month for a total of 480 hours. Jordan can earn $10 per hour is she works.
Consider Policy #1: The government guarantees $500 per month in income and reduces that
be
3
#3) Elise, who is a single mother, spends her money on education and all other goods. Plot education (price = $1) on the
horizontal axis and a composite good (price = $1) on the vertical axis. Assume that the more individuals spend on
education, the hig
WRITE YOUR NAME: _
Economics 309: Public Finance
Winter 2011
Mark Witte and Guannan Luo
MIDTERM
This exam is closed book and closed notes. You can use a calculator if you wish.
Write clearly in the spaces indicated. If we cant read your answer, then its w
Economics 309
Public Finance
Northwestern
University
Mark Witte
Labor Taxation
Review from Optimal Taxation
Ramsey Optimal Taxation advice:
Tax inelastic things heavily
Have a wide tax base and low MTRs
Tax everything a little bit, to minimize growth
Economics 309
Public Finance
Collective Choice
Northwestern
University
Mark Witte
Announcements
Shepsle & Bonchek and Saari
readings in "Course Documents"
on Blackboard
Public Finance
Public Goods: Free Riders and the
Collective Action Problem
Public Fin
Economics 309
Public Finance
Northwestern
University
Mark Witte
Taxation What to tax?
Pigouvian tax on negative externalities
Reduces DWL
Lump sum tax No effect on DWL, pure
income effect.
Consumption Sales or excise tax, unit or ad
valorem, DWL
Inco
Economics 309
Public Finance
Northwestern
University
Mark Witte
Introduction to Taxation
TAXATION
Public Finance
Taxation: Why?
Control negative externalities? Small.
Collect revenue.
Economists hate taxes because of
substitution effects that create DW
Economics 309
Public Finance
Northwestern
University
Mark Witte
Introduction
Luke 2:1-5
And it came to pass in those days, that there
went out a decree from Caesar Augustus,
that all the world should be taxed.
(And this taxing was first made when Cyre'niu
#3) Assume that a person can work (or leisure) at most 16 hours per day times 30 days per
month for a total of 480 hours. Kristin can earn $9 per hour is she works. Assume Kristin
consumes all or her income. Here is Kristins utility function: U = 10 x ln(
The Effects of School Quality
Table 9.4- International Co_m_parisons of Schooling, 2008, 2009 (Ehrenberg and Smith[
Country 2008 Expenditures per 2009 Math Test Scores, 2009 Science Test
Pupil, Secondary Level 15-year-olds Scores, 15
Economics 309
Problem Set 3
Winter 2012
1. Consider an excise tax on a monopoly. The demand curve is given by P = A BQ.
MC is constant and equal to C. Let an excise tax of T be imposed on the monopoly.
Solve for the before-tax and after-tax prices and qua
WRITE YOUR NAME: _
Economics 309: Public Finance
Winter 2011
Mark Witte and Guannan Luo
MIDTERM
This exam is closed book and closed notes. You can use a calculator if you wish.
Write clearly in the spaces indicated. If we cant read your answer, then its w
Economics 309: Public Finance
Summer 2011
Mark Witte
Problem Set 1 KEY
Problem set is due 9:AM in class on Friday, July 8th.
Feel free to work on this in groups of up to four people; you may submit one copy of the problem set
with all of your names on it.
Economics 309: Public Finance
Summer 2011
Mark Witte
Problem Set 1
Problem set is due 9:AM in class on Friday, July 8th.
Feel free to work on this in groups of up to four people; you may submit one copy of the
problem set with all of your names on it.
Do
Economics 309: Public Finance
Summer 2011
Mark Witte
MIDTERM
KEY
The exam has 9 questions and 100 points (question 8 is worth 20 points).
This exam is closed book and closed notes. You can use a calculator and 8.5 by 11 inch
note-sheet (both sides) if you
Economics 309: Public Finance Summer 2011
Mark Witte
Problem Set 2 ANSWER KEY
Income Taxation. Income taxation
IRS Marginal Tax Rates In 2011 you earned $80,000 of salary and have no
other income. You have a personal exemption of $3,700 and take the stand
Economics 309: Public Finance Summer 2011
Mark Witte
Problem Set 2
Feel free to work on this in groups of up to four people; you may submit one
copy of the problem set with all of your names on it.
This problem set will be due on Wednesday, July 27 in cl