Question: California s State Board of Equalization imposed a higher tax on
California’s State Board of Equalization imposed a higher tax on “alcopops,” flavored beers containing more than 0.5% alcohol-based flavorings, such as vanilla extract (Guy L. Smith, “On Regulation of ‘Alcopops,’ ”San Francisco Chronicle, April 10, 2009). Such beers are taxed as distilled spirits at $ 3.30 a gallon rather than as beer at 20¢ a gallon. In response, manufacturers reformulated their beverages so as to avoid the tax. By early 2009, instead of collecting a predicted $ 38 million a year in new taxes, the state collected only about $ 9,000. Use an isocost-isoquant diagram to explain the firms’ response.
Answer to relevant QuestionsA U. S. electronics firm is considering moving its production to a plant in Mexico. Its estimated production function is q = L0.5 K0.5 (based on Hsieh, 1995). The U. S. factor prices are w = r = 10. In Mexico, the wage is ...The United Kingdom started regulating the size of grocery stores in the early 1990s, and today the average size of a typical U. K. grocery store is roughly half the size of a typical U. S. store and two-thirds the size of a ...A firm has three different production facilities, all of which produce the same product. While reviewing the firm’s cost data, Jasmin, a manager, discovers that one of the plants has a higher average cost than the other ...A firm’s revenue varies with its output: R(q). Its manager’s income, Y, equals aR(q), where 0 6 a 6 1 is the manager’s share of the firm’s revenue. Use calculus to prove that maximizing aR(q) implies the same output ...Katie’s Quilts is a small retailer of quilts and other bed linen products. Katie currently purchases quilts from a large producer for $ 100 each and sells them in her store at a price that does not change with the number ...
Post your question