Chapter 6: Q. e (page 134)
Why might people be willing to sacrifice dollars to avoid "feeling bad" about flouting tax laws?
Yes.
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The following information applies to the market for
a particular item in the absence of a unit excise tax:
a.According to the information in the table,in the
absence ofaunit excise tax,what is the market
price?What is the equilibrium quantity?
b.Suppose that the government decides to subject
producers of this item toaunit excise tax equal
to$2per unit sold.What is the new market
price?What is the new equilibrium quantity?
c.What portion of the tax is paid by producers?
What portion of the tax is paid by consumers?
Consider Figure 6-3. Suppose that the government raises its sales tax from 6 percent to 8 percent. Are the predictions of static analysis and dynamic tax analysis in agreement on the direction of the change of government's tax revenue? Explain briefly.
Between 2017 and 2018, the income received by a company located in a city rose from \(5,000,000 to \)6,000,000. The annual city income taxes that the company paid increased from \(250,000 to \)500,000. What was the company's average city income tax rate in each year?
Why might pressures to satisfy government budget constraints give state governments incentives to seek to tax remote sales even if they were to determine that actual net revenues collected likely would be less than originally estimated?
Explain how the taxes government levy on purchases of goods and services affect market prices and equilibrium quantities.
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