Question: Explain how the analysis in Problem 1 is affected if an investment tax credit (which lowers a firms taxes in proportion to the amount spent

Explain how the analysis in Problem 1 is affected if an investment tax credit (which lowers a firm’s taxes in proportion to the amount spent on new capital) encourages overconsumption of tractors.

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Explain how the analysis in Problem I is affected if an investment tax credit (which lowers a firm's taxes in proportion to the amount spent on new capital) encour ages overconsumption of tractors.

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