Explore BrainMass
Share

Tax policies and market efficiency, production, taxes.

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Do tax policies play a role in the ability to achieve market efficiency?

What will the effect be if government promotes production through various programs and then raises taxes on small businesses?

Yes tax policies do play an important ...

Download the detailed solution

© BrainMass Inc. brainmass.com October 25, 2018, 5:19 am ad1c9bdddf
https://brainmass.com/business/the-role-of-government-and-regulation/tax-policies-and-market-efficiency-production-taxes-415237

Solution Preview

Do tax policies play a role in the ability to achieve market efficiency?

Yes tax policies do play an important role in achieving market efficiency. Usually (without getting into too much debt), if taxes are cut for corporations and people, there is more money to spend and or invest. When people buy more goods and services, companies usually gain more profits (assuming they're well run), so stock values go up. Stock values go up when the economy is doing well (usually) because people feel more confident and want to put more money into wall street and abroad too (especially if their economies are doing well because ...

Solution Summary

Do tax policies play a role in the ability to achieve market efficiency?
What will the effect be if government promotes production through various programs and then raises taxes on small businesses?

$2.19
See Also This Related BrainMass Solution

Explain why, in the microeconomics view of the world, the operation of the private market as a default, maximizes economic efficiency--hence, why government intervention on efficiency grounds has to be specifically justified by particular circumstances.

The answers should be 1 short paragraph for each subpart.

a) Explain why, in the microeconomics view of the world, the operation of the private market as a default, maximizes economic efficiency--hence, why government intervention on efficiency grounds has to be specifically justified by particular circumstances.

b) What are the 3 specific circumstances, where the operation of private markets does not maximize economic efficiency, hence, where government intervention is conceptually justfied on efficiency grounds?

c) Picking 2 of the 3 examples from part (b), draw diagrams which show how the market responds to the optimal government intervention designed to correct the efficiency problem, and explain, with appropriate lettering in the figures,, the net economic effects on all of the affected parties, and the net efficiency effect that results when the "market failure" is fixed through government intervention.

d) Explain the conservative critique of the accounting result obtained in part (C), and the more general critique of the philosophy that government intervention is justified to fix the efficiency probblem in such cases. Please see attached handout on "market failure" versus "government failure" for explanation of these 2 terms.

Thank you for your help! If you have questions about the deadline or credit value, please send me a note!

View Full Posting Details