Suppose the price of rice differs by region in a country. Specifically, the price is $10, $13, $11 per hundredweight in regions A, B, and C, respectively. A and C are rural areas, and B is an urban area. All regions have the same population (same number of voters). The government considers building a railroad between regions A and B. If it plans to finance the construction by raising the sales tax rate, do you think it can be politically supported?

Suppose the price of rice differs by region in a country. Specifically, the price is $10, $13, $11 per hundredweight in regions A, B, and C, respectively. A and C are rural areas, and B is an urban area. All regions have the same population (same number of voters). The government considers building a railroad between regions A and B. If it plans to finance the construction by raising the sales tax rate, do you think it can be politically supported?

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter1: Introducing The Economic Way Of Thinking

Section: Chapter Questions

Problem 7SQ

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