Can someone help me with this question? Suppose that there is a tax t on the sales
No answer yet for this question.
Ask a Tutor
Question:
Can someone help me with this question?
Suppose that there is a tax t on the sales of the firm, so that the firm only gets (1 - t ) times the
quantity produced. Show that the return to capital is now (1 - t ) . MPK. What is the new optimality
condition of the firm which determines the target capital stock. By graph show how an increase in
the tax on capital will affect the optimal capital stock and hence investment.
Posted Date: