ecological economics week 1 tiago domingos assistant professor environment and energy section...
TRANSCRIPT
Ecological EconomicsWeek 1
Tiago DomingosAssistant Professor
Environment and Energy SectionDepartment of Mechanical Engineering
Doctoral Program and Advanced Degree in Sustainable Energy Systems
Doctoral Program in Mechanical Engineering
Overview
• Consumer theory– consumers choose the best bundles of goods
• Two parts to theory– “can afford” — budget constraint
– “best” — according to consumers’ preferences
• How much is actually consumed?
Budget Constraint
• Consumption bundle– (x1, x2) — how much of each good is consumed
– (p1, p2) — prices of the two goods
– m — money the consumer has to spend
mxpxp 2211
Budget Constraint
• Taxes, subsidies, and rationing– 1. quantity tax — tax levied on units bought (ex. Car taxes) : p1 + t
– 2. value tax— tax levied on dollars spent (IVA): p1+τp1. Also known as ad valorem tax
– 3. subsidies — opposite of a tax
a) p1 − s
b) (1 − σ)p1
– 4. lump sum tax or subsidy — amount of tax or subsidy is independent of the consumer’s choices. Also called a head tax or a poll tax
– 5. rationing — can’t consume more than a certain amount of some good
• Example — food stamps– 1. before 1979 was an ad valorem subsidy on food
– a) paid a certain amount of money to get food stamps which were worth more than they cost
– b) some rationing component — could only buy a maximum amount of food stamps
– 2. after 1979 got a straight lump-sum grant of food coupons. Not the same as a pure lump-sum grant since could only spend the coupons on food.
Budget Constraint
• IRS, source retention 2009 (not married)
Budget Constraint
• Levels of IRS (2008)
Rendimento colectável (€)
Taxas (%)
Normal (A) Média (B)
Até 4 639 10.5 10.5000
4 639 – 7 017 13 11.3472
7 017 – 17 401 23.5 18.5994
17 401 – 40 020 34 27.3037
40 020 – 58 000 36.5 30.1545
58 000 – 62 546 40 30.8701
Superior a 62 546 42 -