Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

4. For five- years, an oil drilling company has protably operated in the state of Alaska (the only place it operates). (10 points) a. Last

image text in transcribed
4. For five- years, an oil drilling company has protably operated in the state of Alaska (the only place it operates). (10 points) a. Last year, the state legislature instituted a at annual tax of $100,000 on any company extracting oil (or natural gas) in Alaska. How would this tax affect the amount of oil the company extracts? Explain. b. Suppose instead that the state imposes a well-head tax, let's say a tax of $10.00 on each barrel of oil extracted. Answer the questions of part a. Depict the effect of the tax in a graph with demand, marginal revenue, and marginal cost curves. 0. Finally, suppose that the state levies a proportional income tax (say 10% of 9 prot}. Answer the questions of part a. (1. Now suppose that the company has a limited number of drilling rigs extracting oil at Alaskan sites and at other sites in the United Sates. What would be the effect on the company's oil output in Alaska if the state levied a proportional income tax as in part c

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

How China Became Capitalist

Authors: Ronald Coase, Ning Wang

1st Edition

1137351438, 9781137351432

More Books

Students also viewed these Economics questions