Completed quickly and followed instructions given. Grammar, spelling, etc. was all good as well. Thank you so much! Will hire in the future.
Assume that the parameter values in the model of housing tenure
choice are as follows:
i = 0.03 (mortgage interest rate),
h = 0.02 (property tax rate),
d = 0.02 (depreciation rate),
g = 0.04 (housing appreciation rate),
e = 0.02 (rate of excess depreciation),
λ = 0.35 (landlord ’ s tax rate).
( a) Using this information, compute τˆ, the critical consumer incometax
rate that separates renters and owner-occupiers. Note that in this
computation, you are finding the intersection point of the flat rent line
and the downward-sloping line corresponding to the owner-occupier ’ s
cost.
(b) Suppose λ increases to 0.40, and compute the new τˆ . How do the
relative sizes of the renter and owner groups change? Give an intuitive
explanation for your answer, and illustrate your answer in a diagram.
(c) Suppose λ is back at 0.35 but that h increases to 0.03, and compute
the new τ ˆ . How do the relative sizes of the renter and owner groups
change? Give an intuitive explanation for your answer, and illustrate
it in a diagram (note that this diagram isn ’ t as simple as that in (b)).
Please give me the detail of every step. thank you
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