1. Suppose the demand curve for a good is downward sloping and the supply curve is upward sloping. At the market equilibrium, if demand is more elastic than supply in absolute value, a 1 TL specific tax will increase the price to consumers by 1TL. 2. A tax system in which the ratio of tax payments to income increases as income rises is called as proportional tax. 3. The excess burden of a tax is proportional to the tax rate.
1. Suppose the demand curve for a good is downward sloping and the supply curve is upward sloping. At the market equilibrium, if demand is more elastic than supply in absolute value, a 1 TL specific tax will increase the price to consumers by 1TL. 2. A tax system in which the ratio of tax payments to income increases as income rises is called as proportional tax. 3. The excess burden of a tax is proportional to the tax rate.
Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781305971509
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter6: Supply, Demand, And Government Policies
Section: Chapter Questions
Problem 4PA
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