Question
Suppose you live in the state of Taxachusetts, which has a 16% sales tax on liquor. A neighboring state called Taxfree has no tax on
Suppose you live in the state of Taxachusetts, which has a 16% sales tax on liquor. A neighboring state called Taxfree has no tax on liquor. The price of a case of beer is $25 Taxfree, and it is $29 in Taxachusetts. a. Is this a violation of the Law of One Price? Why or why not? b. Are liquor stores in Taxachusetts near the border with Taxfree going to prosper? Why or why not?
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Analysis For Financial Management
Authors: Robert Higgins, Jennifer Koski, Todd Mitton
13th Edition
1260772365, 978-1260772364
