21. In Italy, firms pay tax on reported profits at a constant proportionate rate t € (0, 1). If the firm's profit is a, the owner of the firm can choose to report any amount of profit r where 0 ≤ ≤, and thus pay tr in tax. However, if the firm is audited, it must pay additional tax on unreported profit -r at a rate of t+f, where 0
21. In Italy, firms pay tax on reported profits at a constant proportionate rate t € (0, 1). If the firm's profit is a, the owner of the firm can choose to report any amount of profit r where 0 ≤ ≤, and thus pay tr in tax. However, if the firm is audited, it must pay additional tax on unreported profit -r at a rate of t+f, where 0
Micro Economics For Today
10th Edition
ISBN:9781337613064
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter13: Antitrust And Regulation
Section: Chapter Questions
Problem 13SQ
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why is this Utility from reporting full tax = (1-t)π
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