Economics (MindTap Course List)
13th Edition
ISBN: 9781337670647
Author: Arnold
Publisher: Cengage
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Chapter 18, Problem 1QP
To determine
Explain income tax rate cut that causes rise in the tax revenue and a decline in budget deficit.
Expert Solution & Answer
Explanation of Solution
Cutting income tax leads to an increase in tax revenue of government and decrease in the budget deficit. Therefore, if the total amount of taxable income by government increases by more than the tax cut amount, the tax revenue will increase. Increase in tax revenue leads to a fall in the government budget deficit.
Economics Concept Introduction
Tax rate: The percentage of the tax base that must be paid in tax is termed tax rate.
Tax base: The total amount of income that can be taxed by a taxing authority is termed tax base.
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Students have asked these similar questions
At the 8:10 café, there are equal numbers of two types of customers with the following values. The café owner cannot distinguish between the two types of students because many students without early classes arrive early anyway (that is she cannot price discriminate).
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Students without early classes
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70
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100
The MC of coffee is 10. The MC of a banana is 40. Is bundling more profitable than selling separately? HINT: if you sell the bundle, can you make more by offering coffee separately?
If so, what price should be charged for the bundle? (Show calculations)
Your marketing department has identified the following customer demographics in the following table. Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC=$1. The number of customers in the target population is 10,000.
Use the following demand data:
Group
Value
Frequency
Baby boomers
$5
20%
Generation X
$4
10%
Generation Y
$3
10%
`Tweeners
$2
10%
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$2
10%
Others
$0
40%
Your marketing department has identified the following customer demographics in the following table. Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC=$1. The number of customers in the target population is 10,000.
Group
Value
Frequency
Baby boomers
$5
20%
Generation X
$4
10%
Generation Y
$3
10%
`Tweeners
$2
10%
Seniors
$2
10%
Others
$0
40%
ur marketing department has identified the following customer demographics in the following table. Construct a demand curve and determine the profit maximizing price as well as the expected profit if MC=$1. The number of customers in the target population is 10,000.
Chapter 18 Solutions
Economics (MindTap Course List)
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