Public Economics — Problem Set #1 Due: October 3rd at 2:40pm (submit through the courseworks) 1. Consider a reform that changed welfare benefits in New Jersey and suppose that at the same time there...

It is not an essay assignment, but a problem set of 'Public Economics' course. I have attached the problem set that needs to be solved (file name: ps1.pdf) and the course materials (rest of files) that were used in class.

Answered 2 days AfterSep 27, 2022

Answer To: Public Economics — Problem Set #1 Due: October 3rd at 2:40pm (submit through the courseworks) 1....

Komalavalli answered on Sep 30 2022
Question 1:
a) Assume a general trend that is based on discerning specific terms of potentially unobservable outcomes, or individual specific impacts that we
are attempting to manage by selecting an improbable possibility.
) The disparity approach's validity is predicated on the assumption of equal trends, or more specifically, the premise that there is no variation over time between the treatment and control groups.
c) For Both region New-York and New Jersey average benefit decreases by 2000 after reform.
d) elasticity of hours of work to the level of welfare benefits New York = percentage change in hours of work/percentage change in welfare benefits
EOH newyork = (70-60)/(600-1000) = 10/-400 = -0.025
Elasticity of hours of work to the level of welfare benefits New Jersey = percentage change in hours of work/percentage change in welfare benefits
EOH New Jersey = (60-55)/(800-1000) = 5/-200 = -0.025
Question 2:
a)Economic incidence of this policy includes tax on consumer and producer which is \$100 (\$30+\$70=\$100).
) Excess burden in this is the amount in excess of tax revenue(\$30) collected, that government collected must compensate the consumer in order to maintain its initial level of utility.
D(P)=400-P+100 = 500-P
S(P) = 4P
D(P) = S(P) = 500-P = 4P
500= 5P
P = 100
Q = 400
When tax on consumer \$30 imposed
Excess burden on consumer = Area under demand curve – tax revenue
Excess burden on consumer = ½(500-100)*(400-0)-30
Excess burden on consumer= ½(400)*400-30
Excess burden on consumer= 80000-30 = 79970
Excess burden on consumer is...
SOLUTION.PDF