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Principles of tax equity
The mayor of Denver wants to upgrade the public transportation system. In order to fund the improvements, the mayor proposes charging an extra $1 for each ride taken.
What principle does this tax policy follow?
A) The ability-to-pay principle
B) The benefits principle
C) Both the ability-to-pay principle and the benefits principle
D) Neither the ability-to-pay principle nor the benefits principle
Assume that health insurance begins to cover hip replacement surgeries that everyone interested in getting a hip replacement has health insurance.
Consider a market with a demand curve of P=10-Q and a supply curve of P=Q. Before the imposition of a tax, equilibrium quantity is 5, and equilibrium price is $5 (verify this). If a tax of $5 per unit is placed on this market, quantity traded falls t..
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Will price be lower or higher as such an agreement in long-run equilibrium than would be the case if firms didn't collude.
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