Purchase Solution

Suppose that the current market rate of interest is 10 perce

Not what you're looking for?

Ask Custom Question

Suppose that the current market rate of interest is 10 percent. The market rent on a parcel of land is $6,000 per year. A 10-percent land tax is imposed. As a result of the tax, the price of the land parcel:

falls from $60,000 to $30,000.
increases from $30,000 to $60,000.
falls 10 percent.
falls 20 percent.

According to the Harberger model of the incidence of the corporate income tax, the tax:

reduces the return to capital in the corporate sector of the economy only.
reduces the return to capital in all uses.
has no effect on the return to capital.
increases the return to capital.

If corporations maximize profit, a corporate income tax:

has no affect on the profit-maximizing output in the short run.
reduces the profit, maximizing output in the short run.
increase the profit, maximizing output in the short run.
increases the supply of corporate output in the short run.

Assuming that corporations maximize profits and investors seek to maximize the return to their investments, the long-run impact of a corporate income tax is to:

reduce the incomes of corporate shareholders only.
reduce the incomes of workers only.
reduce the incomes of all investors.
increase the price of both corporate and non-corporate goods.Suppose that the current market rate of interest is 10 percent. The market rent on a parcel of land is $6,000 per year. A 10-percent land tax is imposed. As a result of the tax, the price of the land parcel:

falls from $60,000 to $30,000.
increases from $30,000 to $60,000.
falls 10 percent.
falls 20 percent.

According to the Harberger model of the incidence of the corporate income tax, the tax:

reduces the return to capital in the corporate sector of the economy only.
reduces the return to capital in all uses.
has no effect on the return to capital.
increases the return to capital.

If corporations maximize profit, a corporate income tax:

has no affect on the profit-maximizing output in the short run.
reduces the profit, maximizing output in the short run.
increase the profit, maximizing output in the short run.
increases the supply of corporate output in the short run.

Assuming that corporations maximize profits and investors seek to maximize the return to their investments, the long-run impact of a corporate income tax is to:

reduce the incomes of corporate shareholders only.
reduce the incomes of workers only.
reduce the incomes of all investors.
increase the price of both corporate and non-corporate goods.

Purchase this Solution
Solution Summary

Suppose that the current market rate of interest is 10 percent. The market rent on a parcel of land is $6,000 per year. A 10-percent land tax is imposed. As a result of the tax, the price of the land parcel:

falls from $60,000 to $30,000.
increases from $30,000 to $60,000.
falls 10 percent.
falls 20 percent.

According to the Harberger model of the incidence of the corporate income tax, the tax:

reduces the return to capital in the corporate sector of the economy only.
reduces the return to capital in all uses.
has no effect on the return to capital.
increases the return to capital.

If corporations maximize profit, a corporate income tax:

has no affect on the profit-maximizing output in the short run.
reduces the profit, maximizing output in the short run.
increase the profit, maximizing output in the short run.
increases the supply of corporate output in the short run.

Assuming that corporations maximize profits and investors seek to maximize the return to their investments, the long-run impact of a corporate income tax is to:

reduce the incomes of corporate shareholders only.
reduce the incomes of workers only.
reduce the incomes of all investors.
increase the price of both corporate and non-corporate goods.

Solution Preview

Answers to your study questions:

Suppose that the current market rate of interest is 10 percent. The market rent on a parcel of land is $6,000 per year. A 10-percent land tax is imposed. As a result of the tax, the price of the land parcel:

falls from $60,000 to $30,000.
increases from $30,000 to $60,000.
falls 10 percent. XX ...

Purchase this Solution
Free BrainMass Quizzes
Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.

Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

View More Free Quizzes
Related BrainMass Solutions

  • Calculating the Bond Price, YTM and YTC

    The bonds have a yield to maturity of 10%. Complete parts (a) and (b) below. a) Compute the market price of the bonds if interest is paid annually. b) Compute the market price of the bonds if interest is paid semiannually.

  • Calculate Market Value Capital Structure: Schoof Company

    The going rate of interest on new long-term debt, rd, is 10%, and this is the present yield to maturity on the bonds. The common stock sells at a price of $60 per share. Calculate the firm's market value capital structure.

  • quarterly payment

    You have an opportunity to buy a $1,000 bond that matures in 10 years. The bond pays 6% annual interest, and interest is payable every six months. The current market interest rate for similar bonds is 8%.

  • You have an opportunity to buy a $1,000 bond which matures in 10 years.

    152162 You have an opportunity to buy a $1,000 bond which matures in 10 years. 20. You have an opportunity to buy a $1,000 bond which matures in 10 years. The bond pays $30 every six months. The current market interest rate is 8%.

  • Purchasing power parity, Interest rate parity

    interest rate) / (1+ pound interest rate) = $1.6882 / £ =1.6115x *(1+10.%) / (1+5.%) Let us assume that in the forward market, 1 year forward rate is USD/GBP 1 year forward rate is $1.7115 / £ instead (thus forward rate

  • Bond price changes; holding period yield; bank discount rate

    380546 Bond price changes; holding period yield; bank discount rate Suppose a 10-year bond is issued with an annual coupon rate of 8 percent when the market rate of interest is also 8 percent.

  • Swap Market and Currency Problem

    The company feels that interest rates are rising and that rates will be higher at the next roll-over date in three months. Suppose the current LIBROR3 is 5.4375%. a.

  • Callable Bonds, Market Price, and Applicable interest rate

    The issuer of the bonds has an option to call the bond before it matures, for which it pays in the form of a higher coupon rate. This is the reason why this bonds coupon rate is 10% while the market rate is only 7%.

  • Estimating the current value and YTM in the given cases

    a) What is the yield to maturity on the issue if the current market price is $829 b) If the current market price is $1104 c) Would you be willing to buy one of these bonds for $829 if you required a 12% rate of return on the issue?

  • Price of bonds, YTM, Current yield, portfolio's beta, return on stock

    Interest is paid annually, the bonds have a $1,000 par value, and the coupon interest rate is 8%. The bonds have a yield to maturity of 9%. What is the current market price of these bonds?

View More Related Solutions