--%>
Assignment Help - homework help

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 : Historical process by Adam Smith of

    Writings on the historical process by Adam Smith of economic development do not comprise heavy reliance upon: (1) the development of property rights. (2) self interest. (3) divisions of labor in production processes. (4) innovations d

    		•
  • Q : When productive resources are utilized

    While productive resources are utilized efficiently: (w) prices greatly exceed production costs for current outputs. (x) opportunity costs are at their minimums for all goods. (y) domestic production exceeds the value of foreign output. (z) the value

    		•
  • Q : David Hume statement regarding money in

    In modern parlance, David Hume statement regarding money which is Tis none of the wheels of trade. And tis the oil, was referring to the notion that money: (i) is relatively costly to produce. (ii) facilitates divisions of labor and specialization and

    		•
  • Q : Cooperative and non-cooperative outcome

    Question: Cineplex and AMC are two rival movie theatre chains. They must each decide whether to set an admission price of $10 or set an admission price of $12; of course, the number of movie goers (and thus their r

    		•
  • Q : Illustrate receipts from several

    Illustrate how receipts come from several sources in Federal Finance?

    		•
  • Q : Explaination on Economical Management

    ECONOMICS Explain why each of the following statements is True, False, or Uncertain according to economic principles. Use diagrams where appropriate. Unsupported answers will receive no marks. It is the ex

    		•
  • Q : Elucidate state expenditures and

    Elucidate state expenditures and receipts for all states in 1998?

    		•
  • Q : Main economic functions of government

    Enumerate and briefly discuss the main economic functions of government.  Which of these functions do you think is the most controversial?  Why?

    		•
  • Q : Laffer curve & Tax rate Question: Do

    Question: Do raising tax rates necessarily raise tax revenue? What factors affect how tax revenue changes when tax rates change? Using the 'human capital' investment model,

    		•
  • Q : What are economic resources What are

    What are economic resources? What are the major functions of the entrepreneur?

    		•