Section 9 (TR class)--D'oh... Forgot one thing

If you are in Econ 122-009 (TTh) this pertains to you and your studies for the final exam.

You are responsible for the material on US Income Taxes.

• You should be able to do a problem like the homework problems on the subject.
• You should be able to differentiate between a "marginal tax rate" and an "average tax rate".

You should be able to define:

• progressive tax: average tax rate rises with income (Like the US income tax)
• regressive tax: average tax rate falls with income (Like the Social Security or "payroll" tax)
• flat tax: average tax rate is constant for all incomes
• head tax: each person pays the same dollar value

Such problems are likely to be in a couple of multiple choice problems. I do NOT have any sample multiple choice problems prepared for that. But please review your notes and Homework #11.

Answer Key to Study Questions for the Final

Here is the answer key. Let me know if you think there are any errors.

1-A, 2-D, 3-B, 4-D, 5-B,
6-D, 7-C, 8-A, 9-C, 10-B,
11-D*, 12-C, 13-A, 14-A, 15-C, 16-C, 17-D, 18-C,
19-A, 20-C,
21-B, 22-B, 23-A, 24-C, 25-B,
26-B, 27-A, 28-D, 29-A, 30-B,
31-B, 32-B, 33-C, 34-B,
35-C, 36-B, 37-B

*oops. I didn't talk about deadweight loss with respect to monopolies. There is also a statement about monopoly inefficiency on the review sheet that refers to deadweight loss. Let me clarify.

So what is deadweight loss? Well, it is "lost opportunity for mutually advantageous gains". In the monopoly we argue that it produces fewer units of a good at a higher price, when compared to how the outcome would be under perfect competition. This higher price and lower quantity gives rise to this deadweight loss. The way we expressed this in class is merely that monopolies (and really any firm with market power) can set price greater than marginal cost.

When P > MC, there is inefficiencies. Too little of the good is produced and the price is "too high". This is all in comparison to perfect competition which results in P = MC and all mutually advantageous gains have been exploited.

I hope you are not confused now.

For problems 27 and 28, try increasing output initially by 1500 to an industry output of 10,500, which would put the price at $50 (note, that demand curve is "linear" so its easy to figure that out). You'll see the cheater has the incentive to produce that amount and the other firm will have the incentive to retaliate and we wind up with a total output of 12,000 (6,000 each) at the unit price of $40.

Test 3 results and grades. Section 004 (MW)

The descriptive statistics on test 3:

average = 26.33 out of 40 points (65.8%)
median = 26 (65%)
mode = 25
st.dev. = 5.44 (13.61%)

grade scale (remember, I do not record letter grades, only points) the only grade that matters is the overall course grade based on your overall points.
A: 31.5 and higher
B: 26-31
C: 21.5-25.5
D:16-20
F: 15.5 and lower

Your points to date (out of 68) is recorded on your graded article review (the second one). Take your total points and divide by 68 to get the percentage score. Here is the grade scale that would be employed if I were to give grades based on the points so far. The grade scale is in terms of your percentage score, not raw points. You must convert to the percentage.

A: 86% and higher
B: 75% - 85.99%
C: 64% - 74.99%
D: 53% - 63.99%
F: below 53%

average score: 74.77%
median score: 75.85%
std. deviation: 10.65%

If you have any questions interpreting your score, please see me in the office. I do not like discussing grades over email or AIM. Thank you for understanding.

JJ

Income Taxes 2007

Here is the link to the income tax table from the IRS.

Answer key to test 3 sample problems

Here is the answer key.

Since these are questions from older tests, there are some variations in terminology.

Diminishing marginal product is the same as diminishing returns.

Average revenue is something we did not talk about in class. The concept is simple: average revenue = total revenue / output, or AR = TR/Q. However, for price taking competitors, AR = MR, or average revenue and marginal revenue are the same.

Here is the key:

1-C, 2-A, 3-C, 4-A, 5-D, 6-A (sorry for the repeat)
7-A, 8-D, 9-B, 10-B, 11-B, 12-B, 13-D,
14-A, 15-A, 16-B, 17-A, 18-B, 19-B (The table on p. 3 is for problems 18-22)
20-D, 21-A, 22-D, 23-B, 24-B, 25-B, 26-A, 27-A,
28-A, 29-B, 30-A, 31-A, 32-D, 33-B, 34-A,
35-C, 36-B, 61-D (sorry about the numbering), 37-A,
38-C, 39-B, 40-D, 41-C,
42-B, 43-C, 44-C, 45-C, 46-D.

Let me know if I've make any errors. (Email or AIM.)

Alternate Assignment for Monday April 7 (Section 004 only)

The alternate assignment for Monday's class is now available on the I-drive folder. Please read the instructions carefully. It is due in class on Wednesday, April 9, before the test begins.

The sample problems will hopefully be posted soon.

JJ