--%>

Assertion for the levying of a tax on air polluters

Use the circular flow model to confirm this assertion for the levying of a tax on air polluters?

E

Expert

Verified

This will be an increase in net taxes paid by business. Since business will regard this as an increase in costs, it will decrease its demand for resources, leading to a decreased flow of income to the resource markets.  With less money income, households will decrease their consumption demand for goods and services from businesses and business receipts will be less.  Also, the decrease in household income will lead to a decrease in net household taxes paid to government.

The distribution of income will be slightly away from profits and therefore toward the other three categories.  To the extent that total tax revenues increase, there will be a slight increase in allocation of resources to government away from private enterprise.  There will also likely be a reallocation of resources towards pollution control equipment.  The increased costs to business, having caused decrease in supply, will tend to increase unemployment and prices.

   Related Questions in Business Economics

  • Q : History of King Louis world of commerce

    Early in the 18th century, a leading industrialist responded to an advisor of King Louis IV of France, who asked how the crown could most excellent facilitate the world of commerce, along with “Laissez nous faire,” that im

  • Q : Distinguish between allocative

    Distinguish between allocative efficiency and productive efficiency. Give an illustration of achieving productive, but not allocative, efficiency?

  • Q : Define the for whom query in market

    The market system responses the “for whom?” query with: (i) distributing goods on the basis of require. (ii) using central planning to coordinate production decisions. (iii) catering to consumers with adequate resources to demand goods. (i

  • Q : Exchange is the necessary consequence

    Explain: “Exchange is the necessary consequence of specialization.”

  • Q : Explain the cause of Trade barriers

    Explain the cause of Trade barriers?

  • Q : Calculate Equilibrium Quantity and Price

    1. The owner of a firm calculates that next year's profit will be $1,000. Each successive year profit will increase by 10% (i.e. year 2: $1100; year 3: $1210 and so on.) At the end of the 5th year the firm could be sold for $20,000. A) if the appropriate di

  • Q : Explain increased global competition

    Explain increased global competition?

  • Q : Example of public goods Drinking at a

    Drinking at a public water fountain is: (w) a public good because anyone may drink from it. (x) results in a negative externality because others can’t drink from this at similar time. (y) a positive externality because you are benefiting by other’s provisi

  • Q : Speculators activities over the long-run

    Over the long-run the speculators activities are tend to: (1) decrease the volatility of prices. (2) attract legal attention and result in imprisonment. (3) increase the level and volatility of prices both. (4) yield tremendous profits and raise costs

  • Q : Briefly state the pros and cons of

    Briefly state the pros and cons of Proprietorship?