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Unformatted text preview: i. Fl. Natural because inc cons ii. All OJ because inc prod iii. All OJ because which implies fewer lay offs (D) Which factory should the city tax if it does not care about its own revenue and why? All OJ because inc cons is non-local Suppose there are 2 employers in Milo, MN. A hospital specializing in organ transplants and Mr. R.D. Offutts potato farm. The city is considering a tax on 1 of these employers ($100/transplant, $100/ truckload of potatoes.) Compare the effect of this tax, if it is charged to each employer. Answer: First we see compare so we draw 2 panels. Then, we know that organ transplants is a special case where demand is perfectly inelastic and we are comparing it to one brand so the potatoes are perfectly elastic. The new tax causes the supply curve to shift up and now we label our graphs....
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This note was uploaded on 04/18/2008 for the course ECO 2023 taught by Professor O'gorman during the Spring '08 term at South Florida Community College.
- Spring '08