1.   Advice on the contents of the exam and technical support

If you have questions about the contents of this paper, or you require technical       assistance, please contact our virtual invigilation team at the University of Glasgow Helpdeskhttps://www.gla.ac.uk/help or on +44 (0)141 330 4800.     

Questions relating to the contents of the paper should be raised within the first 3 hours  of the assessment period, when an academic member of staff will be available to answer these.  Technical support will be available 24 hours per day. To ensure timely responses, and that all students receive the same information, you should not contact academic       staff directly but instead use the Helpdesk.

2.   You are about to sit an online assessment

You have a 24-hour period in which to take and complete this exam.  24 hours is NOT the length of the exam.

It should take you no longer than TWO HOURS to complete this exam unless you are entitled to time adjustments (see Section 3. below), or you experience unavoidable  disruption; and you should pay specific attention to guidance provided on the exam  paper regarding the total word count.

You should be able to complete the exam in the time indicated and are unlikely to derive major benefits from taking longer.  Note that spending longer often leads to muddled      answers which do not receive high grades.  It is better to answer in a clear and concise    fashion within the time limit given.

3.   Time adjustments for students with disabilities

If you have in the past been granted adjustments to your exam time, e.g. through the   University’s Disability Service or at School or College, allowance is made for these since you have a 24-hour period in which to complete this exam.

4.   Enlarging the text

If you need to enlarge the text of a PDF document: open Adobe Acrobat; click on the VIEW tab; click on ZOOM and then ZOOM TO; select the desired magnification level.

5.   Planning your time

When planning your time, you should allocate half an hour to download the exam paper and a further half hour to upload your answers to Moodle at the end of the exam.  For    students instructed to do so, you should allow time to submit your exam script on            Turnitin within the 24-hour period.  This will allow sufficient time to report any problems prior to the end of the 24-hour period.

6.   Submitting your answers

Acceptable file types for submitting typed documents are: DOC/DOCX; RTF; PDF; XLS/XLSX.

Acceptable file types for submitting high resolution images are: JPG; PNG; TIF; PDF.

•  Please check that you  have  uploaded the CORRECT  FILE, that  it is readable and is the version that you want to be marked; if you use a word-processing package other than Word, you are advised to convert and upload as a pdf.

•   Lastly please ensure you upload files to the correct course Moodle assignment.

•   Submit (at least) one file per question. You may submit up to 20 files. Subquestions may be submitted in one file according to question.

•  Use  the  following  naming  convention:  StudentID_CourseCode_QuestionNumber  (e.g. 1234567_MGT1001_1). DO NOT include your name

•  This exam has been configured to allow submission of answers for two hours beyond the scheduled exam time. Submissions made during this two-hour period will be treated as ‘late’ and will be graded ‘H’ .

7.    Declaration of Academic Integrity

The following information is very important – your degree may be at risk if you do not adhere to these instructions:

•    You must not communicate with any other person about these examination questions during the period in which you can submit your answers

•    You must follow any instructions on your examination paper regarding use of resources such as internet sources, books, notes or any other material that would not normally be allowed   in examinations on campus.

•   The work you submit must be entirely your own effort and must demonstrate your     understanding rather than reproduce text from notes, slides, books, or online sources (which is plagiarism)

•    You must not submit answers you have discussed with or copied from others, and you must not copy from notes you have prepared with or shared with others.  If your answers are       similar to those of any other candidate(s) you will both/all be suspected of collusion and      referred to Student Conduct

•    This declaration incorporates the University’s Declaration of Originality which applies to all academic work (see below).

8.   Declaring that the work is your own

Before viewing the exam paper, you must check the box in the Exam Section on the Moodle Course page to agree to both this declaration and the University’s                 Declaration of Originality.

For both Section A and Section B:

You do not need to reproduce in your answer diagrams, figures or tables that you may want  to use if they exist already in any of the readings in the reading list, including in Hindriks and Myles (2013). Ensure that you refer to them clearly in your answer, including the specific       Figure/Table number and page number in the reference, and that you explain what we see in them and why/how they are relevant for your analysis. Any additional or modified diagram or figure you may want to use, or any equation or mathematical expression that is needed for    the answer, you will need to draw/write yourselves as part of your answer.

You can combine typed parts of the answer with hand-written parts (e.g. for figures or          equations). However, you should aim to combine, where possible, all documents you create into one document per sub-question for uploading. Ensure that you have undertaken all       steps to help the reader find and link all the relevant information in the documents you         upload. In this respect, it is important that you include page numbers, and that you number  figures and equations and refer to them clearly in your text, with the correct page and          figure/equation number.

Section A

You must answer ONE question, using a separate document for each sub question (the weighting per sub question is noted against the sub question).

Question 1

Consider an economy populated with individuals who derive utility from consumption and leisure.

1.1      Assume that an individual chooses labour supply to maximise their utility, subject to a constant income tax rate. Using diagrams, analyse how the constant income tax rate affects labour supply and welfare of an individual in this economy. Explain the importance of the       participation decision in determining effects on labour supply.

[25%]

1.2       Explain how and why you need to modify the assumptions of the model economy in 1.1, and which additional assumptions you need to add, to examine optimal income taxes in the Mirrleesian framework.

[25%] [Maximum word limit: 1500]

Question 2

Consider the properties of optimal income taxes as derived from the numerical application of the Mirrleesian framework in Hindriks and Myles (2013) (the relevant tables, Tables 16.2 and 16.3, are also attached with the exam).

2.1       Explain whether these properties, obtained numerically, are consistent with the  properties of optimal income taxes in the Mirrleesian framework that are derived theoretically (i.e. using diagrams) in Hindriks and Myles (2013).

[15%]

2.2       Describe and explain the properties of optimal income taxes seen in the tables      associated with the numerical application that are in addition to those derived from the theoretical analysis.

[15%]

2.3       Explain why increased equity may increase social welfare under a utilitarian social   welfare function. Explain how this is manifested in the numerical results in Hindriks   and Myles (2013) associated with the numerical application. Discuss how the results in these tables in Hindriks and Myles (2013) demonstrate the importance that social preferences for equity have for optimal income taxation.

[20%] [Maximum word limit: 1500]

Section B

You must answer 1 question, using a separate document for each sub question (the weighting per sub question is noted against the sub question).

Question 3

Consider a model economy with a public good.

3.1      Assume that the economy consists of two individuals who choose their contribution to the public good. Explain, using diagrams, how to obtain the equilibrium quantity of     the public good in the market economy.

[20%]

3.2      Assume now that the model economy has instead the following characteristics. The  economy consists of many individuals, who may differ in their income. The                government provides the public good using a constant income tax rate to finance the required expenditure. Assume that the quantity of the public good is decided by        majority voting. Show mathematically how income inequality is linked to the quantity of the public good provided by the government. Explain all steps of your analysis,     making clear how they use model assumptions, and provide intuition for the result.

[30%] [Maximum word limit: 1500]