Question
In class we discussed the effects of a per-unit tax t imposed either on sellers or buyers, where t was measured in dollars. Consider the
In class we discussed the effects of a per-unit tax t imposed either on sellers or buyers, where t was measured in dollars. Consider the case of a sales tax that increases the price that buyers pay by a certain percentage. Let be the tax rate in decimals so that 100% is the tax rate in percent. Show graphically how this would change the analysis of the effect of taxes. Is there a deadweight loss?
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Fundamentals of Managerial Economics
Authors: Mark Hirschey
9th edition
324584830, 978-0324588781, 032458878X, 978-0324584837
