The U.S. government imposes an excise tax of $38.20 per passenger on all transatlantic flights.
a) What determines who bears the burden (i.e., the economic incidence) of this tax?
b) Who do you think will bear more of the burden of this ticket tax: a business traveller whose trip is essential for work versus a tourist with flexible travel plans? Why? Explain.
a) If Pfizer is a monopolist in the market for the cholesterol-lowering drug, Lipitor, with constant marginal costs of production of $1/dose (i.e., MC = 1) and faces a daily demand curve (inverse demand function) of the form
, what will be the profit maximizing price and quantity for Pfizers output if it must charge the same price to every consumer?
b) If Pfizer were able to charge a different price to consumers depending on whether or not they have private health insurance, how will this affect producer surplus (in qualitative terms) relative to the situation in (a) where it can only charge a single price? How will this affect market efficiency? Explain.
c) Assuming no other market imperfections or externalities, how will this ticket tax distort behavior in the market for transatlantic air travel, and how will this affect economic efficiency?
d) BONUS: Suppose that the marginal cost of transatlantic air travel is constant and that demand is linear and downward sloping (as usual). How will the burden of the ticket tax be shared between consumers and producers if the airline industry is perfectly competitive? What if airlines have market power (i.e., the industry is imperfectly competitive)?
- Write an article “Why there is a worldwide shortage of vanilla” by C.D. in The Economist.
- What were the most surprising things you learned from this article?
- Write a research essay explaining how one theme in the novel Parable of the Sower by Octavia Butler provides insight into or comments on our contemporary world.
- Write a book review of the insecure city: space, power, and mobility in Beirut.
- What is most important to you about a bank – swag/freebies, customer service, lowest/competitive rates, or ease of online access/app usage?
- Briefly describe other elements of the work(s): the form, the style of language, verisimilitude, and other elements we’ve discussed in class.
- Write a research paper on drug use among first generation college student.
- Explain why Recreational Marijuana Should Be Legal?
- Write a research paper on whether the healthcare should be a fundamental human right.
- Discuss some of the factors that lead to the acceptance of false beliefs as well as some of the factors that lead us to recognize and reject false beliefs.