30.01.2024 Test Exam#

Parts of the Exam

  1. Single Choice = 16 Points (8 Q., 2 Points per Q.)

  2. Big Task with Subtasks = 24 Points

  3. Drawing Task = 20 Points

= 60 Points

Mock Exam Solutions#

1. Task: Single Choice#

Problem Number) and Solution

  • I) 2

  • II) 1

  • III) 3

  • IV) 3

  • V) 4

  • VI) 1

  • VII) 2

  • VIII) 2 (asymmetric information problem learn more)

2. Task#

weird example nation with:

  • Supply of Labor: \(H = 50W\)

  • Demand for Labor: \(H = 2100-10W\)

H = quantitiy of Hours, W = Wage

a) Income Tax of 15$

Normal Equilbrium

\[\begin{split} 50W = 2100-10W \\ 60W = 2100 \\ W = 35 \\ H = 50*35 = 1750 \end{split}\]

After Tax

\[\begin{split} 50 * (W-15) = 2100-10W \\ 60W = 2100+(50*15) \\ W = 47,5 (-15) \\ H = 2100-10*(47,5) = 1625 \end{split}\]

=> higher price, less quantity

Deadweight Loss = \(\frac{ 1 }{2}T * \Delta Q\)

\[\begin{split} \frac{ 1 }{2}T * \Delta Q = 7,5*125 \\ = 937,5 \end{split}\]

b) poportional tax of 20%

before Tax = same

After tax:

\[\begin{split} 50*0.8W = 2100-10W \\ 50W = 2100 \\ W = 42 \\ H = 2100-10*42 = 1680 \end{split}\]

Deadweight Loss

\[\begin{split} Tax = 0,2*42 = 8,4 \\ DWL = \frac{ 1 }{2}*8,4*(1750-1680) = 294 \end{split}\]

=> lower DWL in proportional tax scheme

c) taxing luxury goods

Pro:

  • higher equity (progerssive taxation)

  • lower inequality

  • War = nation assembly for common goal

Con

  • tax evasion

  • inefficient (Ramsey Rule)

3. Drawing Task#

Julia:

  • Income = 800$

  • Two Goods = Food / other Goods (each 1$)

a) Simple Budget Constraint

img

b)

  • Program A: 200$ Subsidy

  • Program B: 300$ Food Subsidy

inverse Scales!

img

c) indifference Curves

A = likes Program A more

B = likes porgram B more

C.= indifference

d) in kind welfare program worth 300$

Effects

  • if food same as bough before = no difference

  • if food not liked = bad effect

Exam Hints#

look strongly at:

  • Public Goods

  • Taxes