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Please answer both parts of the question! A & B Adams Corporation manufactures appliances. This year, the government increased the corporate tax rate by 5
Please answer both parts of the question! A & B
Adams Corporation manufactures appliances. This year, the government increased the corporate tax rate by 5 percent. Adams responded by raising its prices. Customer demand remained steady; therefore, Adams's before-tax profits increased and after-tax profits remained constant. Required: a. Who bears the incidence of the increase in Adams's corporate tax? b. How would your answer change if Adams did not raise prices, resulting in a decline in its after-tax profits and a drop in the market price of its stock? Complete this question by entering your answers in the tabs below. Required A Required B Who bears the incidence of the increase in Adams's corporate tax? Adams Corporation shareholders O Adams Corporation O Adams Corporation employees O Adams Corporation customers Complete this question by entering your answers in the tabs below. Required A Required B How would your answer change if Adams did not raise prices, resulting in a decline in its after-tax profits and a drop in the market price of its stock? Adams Corporation shareholders Adams Corporation Adams Corporation employees Adams Corporation customersStep by Step Solution
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