Assume that medical expenditures are fully deductible from taxes. Show diagrammatically the effect on the demand for
Question:
Assume that medical expenditures are fully deductible from taxes. Show diagrammatically the effect on the demand for medical services. If the elasticity of demand with respect to price is 0.7, what is the effect of deductibility on an individual in the 15 percent marginal tax bracket; in the 28 percent marginal tax bracket; in the 40 percent marginal tax bracket?
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To illustrate the effect of making medical expenditures fully deductible from taxes on the demand for medical services we can use a simple demand and supply diagram Lets consider a scenario where medi...View the full answer
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Related Book For 
Economics Of The Public Sector
ISBN: 9780393925227
4th Edition
Authors: Joseph E. Stiglitz, Jay K. Rosengard
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