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Suppose that the current market rate of interest is 10 perce

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.

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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 ...

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.

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