Suppose you are a government official and need to collect revenue by taxing a product. For political reasons, you want the burden of the tax to fall mostly on consumers, not firms (who have been substantial contributors to your campaign fund). What should you look for when picking a product to tax?
Answer to relevant QuestionsWhich would a rational poor person be more likely to accept and why? a. A $50,000 Mercedes (immediate resale value = $30,000)b. $35,000 cashUsing diagrams show what changes in price and quantity would be expected in the following markets under the scenarios given:a. Crude oil: As petroleum reserves decrease, it becomes more difficult to find and recover crude ...The government, fearful that a titanium shortage could jeopardize national security, imposes a tax of $2/oz on the retail price of this rare metal. It collects the tax from titanium sellers. The original supply and demand ...Repeat Problem 9, but instead suppose the buyer pays the tax, demand is P = 28 - Q, and supply is P = 20.In Problem 5, suppose that in an inflationary period the price of the composite good increases to $1.50 per unit, but the price of malted milk balls remains the same.a. Sketch the new budget constraint. b. What is the ...
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