Private Policies

Question 1


Economic well-being for families in later life is critical. It is clear that economic well-being for families in later life has improved on average, but there are still high rates of poverty and economic marginality. Lifelong advantages or disadvantages embedded in the labor market and public and private policies of income maintenance, for good or ill, follow families into later life to result in security or insecurity. The choice of the family in later life consumer market regarding saving versus spending, and on what types of goods and services, will have a significant impact on the larger economy in years to come. Can our economy support a growing number of economically dependent families in later life for increasingly lengthy periods of retirement and still survive in worldwide competition? These issues are likely to challenge human service and public service leaders for years to come.

Reflect on your role as a human service and public service leader in the discussion and integrate your thoughts on the following:

  • What steps are you taking and what plans are you making in your current stage of your life that will influence your economic security in later life? In taking the long view, what are the major unknowns about how this will turn out? What choices have you already made, and what opportunities have been granted or withheld from you that will determine this outcome?
  • How will these decisions and experiences help you work with families in later life and their economic security?

Question 2
1. An oil producer has 60 barrels of oil to extract and sell in two periods. Assume that the cost of producing the 60 barrels of oil is $0.05/barrel. He will sell the oil either in period 0 and period 1. The demand curve in the two periods are P0 = 5 – 0.05Q0 in period 0 and P1 = 5 – 0.033Q1 in period 1. The discount rate is 10%. (i) If the producer has monopoly power in the market, what’s his extraction plan? (ii) If the government levies 5% tax on the Hotelling rent in period 0, no tax in period 1, what’s his extraction plan in this scenario? (hint: if tax rate is t%, the agent taxed receives r(1-t) from revenue or taxing object r). (iii) If the government levies 5% tax on the Hotelling rent in both periods, what’s his extraction plan? Any surprised findings?

2. Based on the hand-out Excel model, solve the following optimal extraction problems through simulations: (i) R0 = 12; (ii) under (i) δ = 0.04 and 0.06 respectively. What’s the impacts of δ on optimal extraction paths? Why? Submit three Excel print-out results.

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