Completed quickly and followed instructions given. Grammar, spelling, etc. was all good as well. Thank you so much! Will hire in the future.
Reflection paper/Reflection essay
27/08/2022
Suppose there exist a representative agent. Agent derive utility from consumptionC. If agent work for firm, the wage rate is w; however, working hours L brings disutility. Agent has to pay for consumption and labor income tax τL and consumption tax τC. Agent’s maximization problem can be formalized as follows:
max C,L U(C,L) = logC −Lα whereα > 1 s.t (1 + τc)C = (1−τw)wL + π
• Specify agent’s efficiency condition. Explain the intuition behind. A representative firm sell goods in the competitive market, with technology
Y = AL
All the markets are assumed to be competitive. The goods price P is normalized to be 1. Now we have “government” in the economy. Government need to finance its fiscal policy G (τL, τC are exogenous variables, while G is endogenously determined) through labor income tax τL and consumption tax τC. Specifically, government’s budget constraint must hold
τLwL + τCC = G
Noted that, after considering government spending. The goods market market clearing conditions becomes
Y = C + G
• Specify firm’s profit maximization problem.
• Specify firm’s efficiency conditions and the intuition behind.
• Specify market clearing conditions.
• Define the equilibrium
• Solve the prices {w} and allocations. {L,Y,C}.
• Discuss the effect of each taxes to the equilibrium output and price.
4 General Equilibrium ISuppose there exist a representative agent . Agent derive utility from consumption ( . If agent work for firm , the wageate is in however , working hours I brings disutility . Agent has to pay for consumption and labor income tax In andconsumption tax To . Agent’s maximization problem can be formalized as followsmax U ( C , D )logo Is whened >8 . ( 1 1 TOO( 1 Ton ) LolSpecify agent ‘s efficiency condition . Explain the intuition behindA representative firm sell goods in the competitive market , with technologyYEARAll the markets are assumed to be competitive . The goods price Pis normalized to beNow we have ” government ” in the economy . Government need to finance its fiscal policy ? ( To To are exogenousariables , while ( is endogenously determined , through labor income tax Ty and consumption tax To . Specifically , govcrument ‘s budget constraint must holdTOOL + TOO = CNoted that , after considering government spending . The goods market markout clearing conditions becomestoSpecify firm’s profit maximization problemSpecify firm’s efficiency conditions and the intuition behindSpecify market clearing conditions .Define the equilibriumSolve the prices (w / and allocations . ( L K , C )Discuss the effect of each taxes to the equilibrium output and price .
Completed quickly and followed instructions given. Grammar, spelling, etc. was all good as well. Thank you so much! Will hire in the future.
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