Principles of Microeconomics
7th Edition
ISBN: 9781305156050
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 12, Problem 4QR
To determine
Reason for taxing consumption rather than taxing income.
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Chapter 12 Solutions
Principles of Microeconomics
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- What if any are the effects of taxation on a normal profit?arrow_forwardGenerally speaking, how do taxes affect markets? What affect does legal incidence have on economic incidence? What effect does elasticity have on the economic incidence of taxes?arrow_forwardYour Finance Minister considers making a tax reform. He asks you, as a senior tax administrator, to advise him on the requirements from a good tax system. What would you advise him?arrow_forward
- If tax incidence is not affected by whether the government makes buyers or sellers pay the tax then which factors determine the tax incidence?arrow_forwardgive an explanation to the following statements: The higher the elasticity of supply in the labor market, the closer would budgetary expenditure be as a proxy for the social cost of a project.arrow_forwardWhat would it take to convert a sales tax into a true consumption tax? Senator Smith has suggested that the U.S. federal income tax is a more efficient form of tax than the Texas sales tax. What are the arguments for and against this position?arrow_forward
- In a country, a value-added tax (VAT) is applied at each stage of production. The nature of VAT allows for the ____________ of the tax burden along the supply chain, from producers to final consumers. A) Concentration B) Reduction C) Absorption D) Shiftingarrow_forwardSuppose that the government puts a tax of 15 cents a gallon on gasoline and then later decides to put a subsidy on gasoline at a rate of 7 cents a gallon. What net tax is this combination equivalent toarrow_forwardDo you think profit could be maintained if the tax burden were simply passed on to the consumers in the form of higher selling price? How will this affect sales? Explain.arrow_forward
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