Posted: February 9th, 2015

Unit 1

Paper, Order, or Assignment Requirements

 

 

MBA 6871 Public Finance and Legislative Procedures

Unit I

1. The wine industry is currently composed of many firms, and wine is sold in a perfectly competitive market. The wine industry produces the efficient annual output of wine, which is 100,000 bottles per year. The market equilibrium price is $5 per bottle.
2. Draw the market demand and supply of wine, and label the curves to show why the market out¬put is the efficient output.
3. Suppose that the wine industry is consolidated into one large monopoly firm. As a result of the monopolization of the industry, the price of wine increase to $7 per bottle, and the annual quantity demanded falls to 75,000 bottles. Why is this output not efficient? Show the loss in net benefits resulting from monopolization of the industry.

Create a graph on a spreadsheet program (such as MS Excel), copy and paste it into a MS Word document, write your answer in the MS Word document, and upload it to Blackboard.

Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

2. Contrast the various government forms (federal, state, and local), and provide an analysis of their varying sources of revenue, expense structures, and “typical” products provided to the public.

Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

3. A prominent senator has calculated the total social benefit of the current amount of space exploration at $3 billion a year. The total social cost of space exploration is currently only $2 billion. The senator argues that a net gain to society would result by increasing the amount of space exploration until the total cost rises enough to equal the total benefits. Is the senator’s logic correct? Provide reasons to support your opinion about the efficiency of resource use.

 

Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

4. Taxes are likely to affect the incentives that people have to use their own resources in the most productive way. Suppose that the taxes used to finance G1 units of government goods and services could purchase X1 units of private goods and services. Assume that more than X1 units of private goods and services could be produced if taxes did not impair incentives to produce. Use the production possibility curve to illustrate the effect of taxes on the output mix in the economy. Show the loss in private output from taxes on your graph. Show how an improvement in the technology of pro¬ducing government goods and services will affect the production possibility curve.

Create a graph on a spreadsheet program (such as MS Excel), copy and paste it into a MS Word document, write your answer in the MS Word document, and upload it to Blackboard.

 

Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

 

Unit II   (Assessment and PowerpointPresentation)

1. Suppose the position of political candidates on all issues can be ranked on a scale ranging from conservative to liberal. The more conservative a candidate, the less the quantity of public goods he will supply. Suppose as well, that all voters favoring liberal candidates will vote, while only 50% of those favoring conservative candidates will vote. Create a graph like the one in Figure 5.6 to show how the political equilibrium will differ from an election in which all citizens vote. Explain.

Create a graph on a spreadsheet program (such as MS Excel), copy and paste it into a MS Word document, write your answer in the MS Word document, and upload it to Blackboard.

 

2. Suppose the services of a road are subject to congestion after 50,000 vehicles per hour enter the road. Assume that it is feasible to price road services on an hourly basis. Create a graph similar to the one in Figure 4.2 of the textbook to show how the services of the road, in an effort to achieve efficiency, should be priced per hour when fewer than and more than 50,000 vehicles per hour are expected. Explain your answer.

Create a graph on a spreadsheet program (such as MS Excel), copy and paste it into a MS Word document, write your answer in the MS Word document, and upload it to Blackboard.

 

3. Using the CSU Online Library, find several articles that assess the validity of the median voter theorem. Critique advantages and disadvantages of the median voter theorem in elections, public goods, and majority rule, and provide an analysis of your findings.

   Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

 

4. Economists argue that there is an efficient amount of pollution abatement. Why is the efficient amount of abatement unlikely to be either zero or 100%? What is the information that would be required to determine if there is an efficient amount of pollution abatement? Why is it difficult in practice to determine the efficient amount of pollution abatement?

   Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

 

Unit III

1. A needy family of a mother and three children currently receives cash benefits that average $12 per day. The mother of this family is allowed to earn an average of $4 per day before her benefits begin to decline. After that, for each dollar earned, cash benefits decline by 67 cents. Plot the recipient’s money income-leisure tradeoff (budget) line under these circumstances. Assume that she can find work at $4 per hour. How many hours will she have to work per day before her benefits are eliminated? Assuming that her indifference curves for work and leisure are convex, show her equilibrium allocation of time between work and leisure per day. Show that it is possible to have more than one most preferred outcome.

Create a graph on a spreadsheet program (such as MS Excel), copy and paste it into a MS Word document, write your answer in the MS Word document, and upload it to Blackboard.

 

2. A proposal for a negative income tax is designed to provide an income guarantee for each person, irrespective of his/her age or status, of $3,000 per year. Thus, a family of four would have an income guarantee of $12,000 per year. The transfers, under the program, will be phased out at a rate of 25% as earned income increases. Calculate the break-even level of income for a family of four. If all families above the break-even level of income pay a flat rate 25% tax on their earnings, plot disposable income as a function of earned income. Discuss the costs of this plan.

Create a graph on a spreadsheet program (such as MS Excel), copy and paste it into a MS Word document, write your answer in the MS Word document, and upload it to Blackboard.

 

3. Contrast the varying assistance programs for the poor in the United States, addressing how benefits are allocated, funded, and controlled.

 

4. What is the cost-benefit analysis of a government program? Explain all variables and factors that impact cost-benefit analysis.

 

Unit IV(Assessment and Scholarly Activity)

1. Give one method used by U.S. private health insurance companies to encourage their policy holders to make fewer visits to their doctors. Explain why this method works to reduce doctor visits.

Create a graph on a spreadsheet program (such as MS Excel), copy and paste it into a MS Word document, write your answer in the MS Word document, and upload it to Blackboard.

 

2. How do health care providers control expenditures for health care? Suppose reimbursement rates to physicians under all payers are limited by law. Use the supply and demand analysis to show how the limit on the amount of reimbursement is not the only effective way to decrease expenditures for health care if health care providers succeed in increasing the demand.

 

3. Explain the asset substitution effect of Social Security. How does the asset substitution effect change the choices made by a worker who is saving for retirement? For many workers, their savings decisions will be affected by the asset-substitution effect in the long run. What is the impact on the labor productivity of the typical worker? Explain.

Create a graph on a spreadsheet program (such as MS Excel), copy and paste it into a MS Word   document, write your answer in the MS Word document, and upload it to Blackboard.

 

4. Use indifference curve analysis to show how the Social Security pension system can reduce annual consumption for some workers who have a strong preference for current versus future consumption. What factors will influence the effect of the Social Security system on an individual’s well-being and savings rate?

Create a graph on a spreadsheet program (such as MS Excel), copy and paste it into a MS Word document, write your answer in the MS Word document, and upload it to Blackboard.

 

Unit V

1. Assess the implication of a government budget surplus on the following:

   National saving
   b. Interest rates
   c. Private investment
   d. Economic growth
   e. Future living standards

   When assessing the effects of the budget surplus, list the assumptions you are making.

   Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

 

2. Analyze various methods of government financing in their budget, and provide a synthesis of the strengths and weaknesses of these methods, as well as their long term effects.

   Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

 

3. The classical economists argued that budget deficits would not affect current spending. Suppose the federal government increases its purchases of goods and services by $100 billion this year. Classical economists who believe in the idea of Ricardian equivalence would argue that the increase in federal spending would have no effect on aggregate spending in the economy and no effect on private investment. Why would a $100 billion increase in spending financed by a deficit have no effect on the economy other than a reallocation of resources from private to government use?

   Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

 

4. Assess the various forms of taxation a government can use to support revenues. For each, analyze the impact of the different taxes on economic growth, incentives, investment, savings, and living standards.

   Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

 

Unit VI

1. Assess how deductions and exemptions impact personal preferences, providing examples where applicable. You can search http://www.irs.gov for more information.

   Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

 

2. Why is it difficult to predict the effect of a comprehensive income tax on saving? Explain an individual’s choice between consumption and saving?

   Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

 

3. What is the rate structure of the U.S. federal income tax? Analyze the progressive nature of the U.S. tax system and its consequences.

   Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

 

4. What are tax expenditures? How does the elimination of tax preferences affect tax expenditures?

   Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

 

Unit VII (Assessment and Essay)

How can the corporate income tax, as administered in the United States, affect the choice between equity and debt finance?

Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

 

2. What are selective property taxes? Discuss the advantages and disadvantages of property tax legislation as it is currently applied in the U.S. to businesses and governments.

   Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

 

3. Suppose the corporate income tax were eliminated and the revenue lost was made up by increasing the payroll tax rate on labor earnings. What would be the impact on labor and capital markets of such a shift in tax policy? What is the likely differential incidence of substituting a payroll tax for an equal-yield corporate income tax?

   Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

 

4. Why would expensing of capital assets for tax purposes encourage investment in new capital? Provide an example to support your answer.

 

Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations

 

Unit VIII

1. What is the difference between centralized and decentralized government? What are the advantages of a federal system of government?

   Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

2. A furniture manufacturer sells $500,000 worth of tables, chairs, and other items in a given year. The manufacturer earns a profit of $100,000 that year. His purchase invoices indicate that he bought $200,000 worth of lumber, varnish, nails, and other materials during the year. His labor costs were $150,000, and he purchased $50,000 of new equipment that year. Calculate his tax liability under a 15% consumption type VAT. Give examples of different types of alternative VATs, and explain their use.

   Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.

 

3. What is a VAT? Give an example of VAT in other nations.

   Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations

 

4. Why are local tax bases more elastic than national tax bases? Give an example, and explain other possibilities that may make the tax base more elastic.

   Your response should be at least 200 words in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations.