Many states are now imposing severance taxes on resources being extracted within their borders. How is the consumption path of depletable resources with severance taxes imposed compared to the case without taxes? Assuming an increasing marginal extraction cost of depletable resources over time. A. For the same time period, consumption for depletable resource decreases due to the imposition of severance taxes. B. For the same time period, consumption for depletable resource increases due to the imposition of severance taxes. C. For the same time period, consumption for depletable resource stays the same regardless to the imposition of severance taxes.
Please answer questions 2, 3, and 4.
2. Many states are now imposing severance taxes on resources being extracted within their borders. How is the consumption path of depletable resources with severance taxes imposed compared to the case without taxes? Assuming an increasing marginal extraction cost of depletable resources over time.
A. For the same time period, consumption for depletable resource decreases due to the imposition of severance taxes.
B. For the same time period, consumption for depletable resource increases due to the imposition of severance taxes.
C. For the same time period, consumption for depletable resource stays the same regardless to the imposition of severance taxes.
3. Suppose there exists a renewable energy substitute for depletable resources with an increasing marginal extraction cost. How would per-unit subsidy on renewable energy change price path for renewable energy?
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